Emerald AI Data Center Flexibility Bet Targets Grid Capacity Crunch

A $1 billion bet on making data centers flexible

Opposition to AI data centers has become one of the biggest risks facing the industry, and one of the strongest responses so far has come from software, not new power plants. In late August, Emerald AI announced a $150 million funding round that valued the two-year-old startup at $1.05 billion. The venture firms DCVC and Energize Capital led the round, and Nvidia, Samsung Ventures, GE Vernova and Salesforce Ventures also invested.21 The company says its software can make large computing sites "flexible" in how much power they draw, so they cut back when utilities need relief instead of pulling at full strength around the clock.21

The idea is simple to state. Emerald's founder and CEO, Varun Sivaram, has said he wants to turn data centers "from villains into heroes."22 The software uses AI agents to adjust power use at data centers based on how busy the grid is and on instructions from the utility. It builds on research by Boston University professor Ayșe Coskun, who is the company's chief scientist.22 It has been tested at five data centers with partners including Nvidia and Oracle, and the company now has contracts in California and Virginia.22 Former Secretary of State John Kerry and longtime Google engineer Jeff Dean were early investors.22

The best public evidence so far comes from a pilot at a Phoenix data center with Nvidia and Oracle. There, the platform cut power use by 25% during peak demand without hurting the quality of the computing work.26 Emerald says the approach could free up as much as 100 gigawatts of capacity on the existing U.S. grid for AI.26 That is the company's own estimate and has not been independently confirmed. Still, it explains why chipmakers and grid-equipment makers are paying attention.

The grid problem Emerald is selling into

Silicon Valley Power, the city-owned utility in Santa Clara, California, shows the squeeze. It serves about 55 data centers in roughly 20 square miles, with customers that include Nvidia and Intel. Even while working to double its capacity, it cannot meet demand as fast as customers want.21 Utility director Nicolas Procos said all of the system's spare capacity "has all been spoken for," which leaves two choices: build out the grid or find creative workarounds.21 Emerald is one of those workarounds.

The national numbers show the same strain. Bloom Energy projected in January that U.S. data center power demand will nearly double between 2025 and 2028, from 80 to 150 gigawatts.13 Worldwide, data center electricity use has grown about 12% a year for five years and is expected to double to 945 terawatt-hours by 2030.30 The Electric Power Research Institute estimates that a single 1-gigawatt site uses about as much power as 800,000 homes.11 Getting connected to the grid already takes four to six years in major data center markets, and up to a decade in places like Tokyo.18

Regulators are starting to see flexibility as useful. Energy Secretary Chris Wright has asked the Federal Energy Regulatory Commission (FERC) to set rules for connecting large data centers to the grid. One of his proposals is to move projects that can cut back their power use to the front of the line.15 If rules like that take hold, flexibility stops being a public-relations gesture and starts getting projects connected faster. That is a much stronger business case for a company like Emerald.

A backlash measured in billions

The pressure on the industry is now hard to miss. According to Data Center Watch, local opposition blocked or delayed 75 projects worth $130 billion in the first three months of 2026, about as many as in all of 2025.28 By the end of June, at least 120 projects worth nearly $200 billion had been stalled.12 In an Annenberg Public Policy Center study, 61% of U.S. adults opposed new data centers near them, including majorities of Democrats, Republicans and independents.25 A Pew survey this summer found that 60% would be uncomfortable with a data center nearby and half believed these facilities push up household energy bills.11

The issue is now part of national politics. President Trump has said communities that turn away data centers will end up "backwards and poor." Build American AI, a group tied to the pro-AI super PAC Leading the Future, has launched a multimillion-dollar ad campaign in battleground states including Kansas, Ohio and Wisconsin.25 Even so, a National Republican Senatorial Committee memo reportedly called data centers an "anchor" around Ohio Senator Jon Husted's neck ahead of the midterms.20 At the Yotta 2026 conference in late September, one industry advisor admitted the sector may have "pretty much blown it" by responding too late.27

Where the cost debate splits

The central question is how much data centers are actually raising power bills, and the answers differ. Average U.S. residential electricity prices rose 15% from January 2025 through July 2026. For the first seven months of 2026, they were nearly 40% higher than in the same period of 2019.11 PJM is the regional grid operator that serves 13 states and includes Northern Virginia's "Data Center Alley." Its independent market monitor found that data center demand added $9.3 billion, or 174%, to capacity costs for the 2025-26 delivery year.16 Harvard's Ari Peskoe says those costs are generally spread across all of a utility's customers.16

The industry has pushed back. A study by the consulting firm E3, paid for by the Data Center Coalition, found no hard evidence that other customers have historically subsidized data centers. It also argued that blaming rising bills on a single visible cause oversimplifies things.15 Chip research firm SemiAnalysis blamed PJM's capacity auction rules for most of the price spikes and pointed to Texas's grid, where prices have stayed fairly stable despite heavy data center growth.18 Fact-checkers have also reined in critics: PolitiFact rated Senator Elizabeth Warren's claim of a 267% bill increase "Mostly False," because that figure described wholesale power prices, not household bills.16

The most balanced reading is that data centers are not the only reason bills are rising, but they are a major one where grids are already tight. Market design largely decides how much of the cost lands on households. The Dallas Fed's modeling supports this. It found that even a modest data center boom could add 0.04 to 0.13 percentage points to annual inflation by 2030. Demand concentrated in peak hours, which is exactly what flexibility software targets, produces the bigger effects.19

Nuclear: the long fix

The other big industry answer is nuclear power, and the deals keep getting bigger. In early October, Google signed a 20-year agreement with Constellation Energy. It supports more than $4.3 billion in upgrades at 11 reactors across six sites in Illinois, New Jersey and Pennsylvania, adding 890 megawatts to the PJM grid.2 Google also signed a separate 15-year deal for 2,700 megawatts from Constellation's existing plants.2 Constellation CEO Joe Dominguez said Google's financial backing amounts to bringing "effectively a new reactor" online. Google's Amanda Peterson Corio acknowledged that the deal comes as data centers face heavy criticism.4 A week earlier, Amazon agreed to buy 690 megawatts from Constellation, including added capacity at Maryland's Calvert Cliffs plant.7

Some of these deals are now designed to answer the cost complaint directly. Oracle says buying power from Wisconsin's Point Beach nuclear plant could save We Energies customers $300 million in fuel costs from 2027 to 2033. Those customers have been paying for a contract with that plant whose costs keep climbing.10 A consumer advocate called the move a step in the right direction, but 74% of Wisconsin voters still say data centers cost more than they are worth.10

Timing is the problem. Hyperscalers have committed about 9.8 gigawatts of nuclear capacity across 13 deals, but as of July only about 1.92 gigawatts was actually delivering power.8 The restart of Three Mile Island Unit 1 for Microsoft is expected in 2027. Meta's TerraPower reactors are targeted for 2032 to 2035.5 Google's first upgraded Constellation plant is not expected until 2028, with all upgrades finished by 2032.6

The verdict: flexibility buys time, not trust

Taken together, the reporting points to a clear conclusion. Nuclear power is the long-term answer to how AI gets its electricity, and making better use of existing grids is the answer for the next few years. Emerald's pitch fits the gap between the two: a data center that can cut its draw at peak times could be connected now instead of waiting on transmission lines or reactors due in 2032. That helps explain why GE Vernova and Nvidia both invested, and why regulators are writing flexibility into connection rules.2115

But the startup's goal of reversing the backlash goes further than its software can. Residents also object to water use, noise, generator pollution and short-lived construction jobs, and many simply distrust the companies making promises.2725 Lowering peak demand eases pressure on the grid. It does not make a 1,000-megawatt project in a town of 30,000, like the one opposed in East Fishkill, New York, any less overwhelming.17 Emerald may well help the industry build faster. Whether that wins back the public depends on whether households actually see lower bills.