Tech giants made 'epic mistake' over AI power says $300bn 'Trump' plan tycoon

A plan to build the world’s largest data centre hub is a $300bn homage to Donald Trump’s policies – and might even bear his name. That’s appropriate because Toby Neugebauer, one of the investors leading the Texas mega-project, has a distinctly Trumpian turn of phrase when declaiming what's gone wrong and how it should be fixed.

Hypergrid, for which Fermi America is partnering with Texas Tech University, will be powered by two of the president’s favourites – 5GW of gas supplied from abundant local fields and some 6.5GW of nuclear, adding up to what’s claimed to be “the world's largest advanced energy and AI campus”.

The demand needed to underpin such massive ‘behind the meter’ generation reflects what Neugebauer claims was a major misstep by hyperscale data centre operators that put their faith in the US power grid to meet their soaring needs.

Neugebauer claimed that over “the last 60 days” it had become clear to the tech giants that land tied to grid power was the equivalent of “an oceanfront property in the middle of a desert”.

“They made an epic mistake believing that there was enough power on a very old and tired US grid to power next generation AI. So, demand is the least of the least of my worries about where we are.”

Neugebauer cited a July statement by the US Department of Energy questioning the ability of the grid to support AI growth, adding: “We made these decisions to secure power, and secure a place where you weren't counting on grid power, well before everybody understood what the problem is.”

That place is a complex in Amarillo in the Texas panhandle that Fermi reckons will eventually host 18 million sq ft (1.7 sq km) of AI computing capacity.

The company has already disclosed orders for 600MW of Siemens Energy and GE combined-cycle gas turbines, with another 600MW earmarked, as part of a plan to get 1GW of capacity ready to go by the end of 2026.

As for the nuclear power, that will initially come from four AP1000 Westinghouse nuclear reactors of the type already in service in China and the Middle East, followed by small modular reactors (SMRs) as they enter the market.

There is a role for solar power – about 1MW for every 3MW of gas – and battery storage. The Hypergrid will even be connected to the grid as part of the US Southern Power Pool (SPP).

Seen from the other side of the Atlantic, from a European perspective, would it be fair to say that the plan’s sustainability credentials look questionable?

Europe facing 'structural disadvantage'

Neugebauer isn’t having any of it.

“We'll have the lowest emissions of any grid in the United States,” he said.

Mention of Europe prompts the Fermi boss to take aim at a familiar target for Trump himself – Angela Merkel, the former German Chancellor and architect of Germany's ‘Energiewende’ or energy transition towards renewables, which Neugebauer apparently believes had a continent-wide impact.

“I’m very worried about Europe [which] made a horrible mistake. Angela Merkel…. disqualified Europe from a real place in the AI world because you can't shut down your nukes and that gas and be at the epicenter of AI.

“AI is going to be a 'cost of energy' game. Europe is going to be one of the most expensive places on the planet to generate AI. So, you have some of the greatest minds on the planet that are going to be at a significant structural disadvantage because of Angela Merkel's just catastrophic pressure to get rid of nuclear and natural gas.”

He added: “We could not be more pro-environmental, but we also don't want to be disqualified.

“I mean, we're so far behind the Chinese now in nuclear. It's embarrassing. It's embarrassing to the Western civilisation.”

So how much will all this cost? Fermi’s share, the power infrastructure, should come in around $40bn. By the time the hyperscalers it hopes will flock to Amarillo have put up their own facilities, the total campus will be a $300bn investment.

“But you start looking at the revenues of the AI sellers, your Googles, your Metas, your Amazons, your Microsofts, your Oracles, your Open AIs. It's really just a fraction of the overall revenues that the artificial intelligence that will be created at this site will produce.

“When you put into context what 11GW of AI generates for those big companies a year, you know, the numbers are really relatively minor when you amortise them all over 20 to 25 years.”

“We think the equity component of this is $3-$4bn.”

Trump namechecked in regulator submission

Fermi is off and running with a license application to the US Nuclear Regulatory Commission (NRC) for the first four nuclear reactors.

The application letter does not refer to the plan as the Amarillo Hypergrid – but as the ‘President Donald J. Trump Advanced Energy and Intelligence Campus’.

So, would the facility be named after Trump? “We have not decided the name of the campus. But we absolutely believe Donald Trump deserves significant credit for the nuclear renaissance in the United States,” said Neugebauer.

And how about the, how shall we say, not unblemished track record of nuclear power as far as sticking to budgets and schedules?

As far as cost goes, Neugebauer claimed: “If you built a nuclear power plant in the United States, and you were 40% over budget [from] what the Chinese built it for, what the utility in Abu Dhabi built it for, it would still not represent more than 25% of the overall cost of the overall investment required to generate AI.”

“The only person who's built on time successfully is an American. He built the eight reactors in China. He built the four reactors in Abu Dhabi. And he joined Fermi America.”