In this Industry Insight episode of the On Aon podcast, Aon’s power and energy leaders discuss why access to reliable power is becoming a defining factor in growth, investment and business strategy. As AI, digital infrastructure, electrification and manufacturing expansion accelerate demand, organizations must think beyond energy consumption and consider how power availability, infrastructure readiness and capital deployment will influence future opportunities.
The conversation explores how leaders can make more informed decisions by evaluating interconnected risks earlier, strengthening confidence among investors and insurers, and aligning digital infrastructure investments with long-term business objectives. It also examines how data-driven insight, climate analytics and a diversified energy strategy can help organizations unlock growth, secure financing and stay ahead in a rapidly evolving environment.
Key Takeaways:
Experts in this episode:
Key Moments:
(1:40) Why rising demand from AI, digital infrastructure, electrification and manufacturing is turning power availability into a boardroom issue.
(5:50) How leaders can balance reliability, affordability and sustainability while accounting for climate, regulatory and supply-chain considerations.
(10:20) Why infrastructure investment, risk insight and a diversified energy strategy will help determine which organizations are best positioned for growth.
Soundbites:
Charles Philpott:
“Power quickly becomes more than an operational issue. It becomes a strategic growth issue. Meeting that demand will take more than generating additional power. It will require resilient infrastructure, greater investor confidence, and better decisions about risk and capital.”
Carol Stark:
“The forward-looking companies really are not only looking at today and their climate concerns, but the future. Because these are 25-, 30-year assets that are going to need to be resilient as the climate changes. And to only look at the picture now versus the picture over time really is short-sighted.”
Rebecca McCabe:
“What we know is that organizations will be able to define their success when they really think about these interconnected risks early on and address them early on in their life cycle. And that's really important to think about in terms of addressing the broader discussion around power supply and demand.”
Charles Philpott
Power quickly becomes more than an operational issue. It becomes a strategic growth issue. Meeting that demand will take more than generating additional power. It will require resilient infrastructure, greater investor confidence, and better decisions about risk and capital.
Intro:
Hello and welcome to the latest episode of On Aon. Power is becoming one of the defining issues of the AI economy. As demand for data centers, electrification and digital infrastructure accelerates, business leaders need to understand what it means for resilience, investment and long-term growth. Today, Aon’s Charles Philpott is joined by Rebecca McCabe and Carol Stark to explore how organizations can navigate the risks — and opportunities — ahead.
Here’s Charles to kick off the conversation
Charles Philpott (00:00)
Hello, I'm Charles Philpott, the global natural resources leader for the Enterprise Client Group at Aon. And this is the latest episode of the On Aon podcast. In an episode last month, Aon's Joe Pieser and Liz Henderson talked about how organizations can strengthen their climate resilience.
Today, we're building on that conversation by asking a fundamental question. How do we power the next era of economic growth? AI and data centers may be driving extraordinary advances in technology, but they're also driving demand for electricity, water, grid capacity, and physical infrastructure.
Add electrification, geopolitical uncertainty, critical mineral constraints, and climate pressures and power quickly becomes more than an operational issue. It becomes a strategic growth issue.
Meeting that demand will take more than generating additional power. It will require resilient infrastructure, greater investor confidence, and better decisions about risk and capital.
Here to help us understand what that means for organizations is Rebecca McCabe, Aon's U.S. Power and Renewables Leader, and Carol Stark, Aon's North America Renewable Energy Practice Leader. So, Rebecca and Carol, welcome to the show.
Rebecca McCabe (01:22)
Thank you, Charles. It's great to be here.
Carol Stark (01:24)
Thank you, Charles. Excited for the conversation.
Charles Philpott (01:27)
It's so good to be with both of you today. So let's jump in. For decades we've seen gradual increases with power demand tied to economic growth. So. what's different about the demand we're seeing today?
Rebecca McCabe (01:39)
Charles, what's so different about the demand for power that we're seeing today is something that we have not seen in our generation. And it certainly a lot of us are hearing a lot about the build out for data centers, digital infrastructure, and the demand on power that AI is generating.
And hyperscalers and the data center growth is maybe something that has been front page, but what we also know is that power demand is also being driven by other factors. And those factors include just the general electrification across multiple industries. We're also seeing the demand for electric vehicles, which is also driving demand for power as well. We're also seeing certain other types of manufacturing, the reshoring of manufacturing, particularly here in the US.
It's all coming together to drive a significant power demand, unlike anything that we've seen today.
Carol Stark (02:35)
And building on that, I think the demand for power really is reflective of the increase in electrical use across industry, like Rebecca said.
More importantly, the aging of our infrastructure is really impacting how power is being delivered to these entities. And so it's really a chicken and egg situation where the demand for power is driving increased CapEx requirements for power generation and for the improvement of the infrastructure.
It's also driving potential solutions like behind-the-meter, where the power source connects directly to the need for the power.
And so between the factors that Rebecca mentioned and the aging infrastructure, I think the demand for power really is becoming a critical issue for companies.
Charles Philpott (03:31)
And when business leaders hear AI demand, they often think about just computing power. Why should they also be thinking about electricity and water and, you mentioned it, physical infrastructure?
Rebecca McCabe (03:44)
And Charles, all of these elements really are coming together to create a significant amount of competing pressures that do drive this conversation around power reliability and affordability and sustainability. And so we're seeing that there are these pressures are intertwined and are very interconnected and very complex. But what we know is that organizations will be able to define their success when they really think about these interconnected risks early on and address them early on in their life cycle.
And that's really important to think about in terms of addressing the broader discussion around power supply and demand. The risk element of that will determine the success of how our power is supplied and the demand going forward in the future.
Carol Stark (04:39)
Excellent points, Rebecca. And I would just add to that the concern over the water consumption and the electrical cost that is being driven by this exponential need for power. And it's not just data centers that are driving this exponential demand for power. As our world increases in heat, there's an increase for air-conditioning, there's an increase for cooling and manufacturing facilities.
So it's one of those instances where there are a lot of different draws on power that really was not contemplated even three to five years ago. And so it's one of those instances whereby companies need to think about not only the cooling requirements now, but how climate change is going to impact those cooling requirements into the future.
Charles Philpott (05:33)
So really in summary, the AI economy isn't just creating demand for computing power. It's creating demand for power infrastructure. So as we take that and think about it, as demand rises, how can organizations balance energy security, affordability, and reliability?
Rebecca McCabe (05:53)
Charles, that's the question that everyone is asking is how can these elements be balanced to really result in success for the power discussion going forward?
And a lot of this has to do with obviously there are competing pressures, there are uncertainties here. These pressures include not just the demand for power that's being fueled by the factors that we mentioned, but we also, as part of this, have other types of competing pressures.
So very complex and very interconnected. And we see that there will be an opportunity for those organizations to think about these in a very interconnected way. And we'll be able to think about these early on and working with their partners to help them address these risks as they begin building out power systems rather than as they are building them out midstream.
Carol Stark (06:57)
And I think the one thing that a lot of companies are starting to do is think about various power generation sources, not just reliance on the grid itself. I talked about behind the meter earlier, but being able to be sustainable from interdependence between traditional power and battery energy storage, which can feed during peaks and demand for power.
It's also something whereby the critical minerals in the supply chain have become even more critical. Earlier this year, there was a ban on inverters that would basically sent ripples through the solar marketplace. And for those companies that had planned and had supply chains, they actually were more stable than some of their competitors who had challenges in the fact that their planning for the future build had become more difficult.
I think what Rebecca talked on as far as legislative and regulatory permitting is a big issue here in the United States. And thankfully it appears that the Senate has come to an agreement on a bipartisan bill for permitting reform. And that will really help expedite the capex that is needed to build these energy, these power assets and bring them to the market as the demand increases.
Charles Philpott (08:23)
I know that everyone has been very focused on permitting and it is wonderful to hear that some reform opening up the ability to continue to invest and build out the data centers. Where do you see some of the greatest vulnerabilities emerging?
Rebecca McCabe (08:39)
Charles, one of the most underestimated risks that we're seeing really falls into the category of climate risk. And more specifically, I would say that extreme heat is something that is often underestimated because it attacks both sides of the equation simultaneously when we're talking about power generation and power supply and demand.
Because extreme heat increases demand precisely when it reduces the supply and the network performance. And so those factors create a systemic reliability challenge that many, let's say, power developers, investors and operators really fail to fully model out on the front side of their projects. Extreme heat is something that that we're talking to our clients a lot about and we know that it is something that sometimes could be an inhibitor to a successful project.
Carol Stark (09:33)
That's an excellent point, Rebecca. And I think the forward-looking companies really are not only looking at today and their climate concerns, but the future. Because these are 25-, 30-year assets that are going to need to be resilient as the climate changes. And to only look at the picture now versus the picture over time really is short-sighted. So we're seeing our forward-thinking clients really taking up the climate risk banner and investing in robust climate resilience and with that resilience will become more favorable terms as far as finance-ability and long-term sustainability.
Charles Philpott (10:17)
And so what needs to happen next to support future growth?
Rebecca McCabe (10:22)
Charles, as we look into the future and how this future growth in and power supply will occur, we certainly see that there's an opportunity here for things such as continued investment in infrastructure build-out.
We also see that there are certainly some opportunities for the role of risk analytics to help organizations make better decisions around site selection around their risks and that will directly tie back to and link the insurability discussion with the finance-ability of their projects. And we also see that it is going to truly be an all-of-the-above strategy when it comes to power supply options and power supply generation sources.
Carol Stark (11:11)
Yeah, and that all-of-the-above is really critical for meeting the demands and the ever-increasing demands of power generation because you can't rely solely on one type of power generation asset. You have to be resilient enough to have power being generated from geothermal, from nuclear, from wind and solar, from combined cycle generation, natural gas. It's one of those things that we need to broaden the power infrastructure and be open to adoption of these new technologies so we can meet that rising power demand.
Charles Philpott (11:51)
Rebecca and Carol, you put a lot of things on the table for our guests to consider. And, in bringing our conversation to a close, if listeners take away one message from today's conversation, what should it be?
Rebecca McCabe (12:04)
Charles, one of the things that I'd like to share with our listeners today as we wrap up the conversation is certainly our optimism around the future and the optimism that we have around the emerging technologies innovation that is being driven by some of the discussions that we've had and the constraints that we talked about today with power supply and demand.
One of the things that is so exciting is that we're starting to see a lot of emerging new power technologies come to fruition. And this will continue to address not only today's power demand, but also really position the power supply conversation to be much more sustainable and reliable in the future.
So we're very excited about that.
Charles Philpott (12:47)
And Carol, how about you?
Carol Stark (12:48)
Excellent points, Rebecca. And I think the one thing I'd like to leave the listeners with is getting involved early in the pre-development phase of these projects is critical because that's where we can deliver the most value.
We have insights across various different power generation assets. And I think that pre-development phase allows for lessons learned. It allows for building in resilience and it allows for understanding where the market is now and where the market is going and tying all that together early really makes projects much more financeable and bankable.
Charles Philpott (13:27)
I love leaving a show on a high note. And Carol, that's great advice.
And so thank you all for listening. And don't forget, you can find out more about how Aon can help in planning and protecting digital infrastructure and talk to an Aon colleague about our solutions by going to Aon.com.
In the coming months, we'll have more episodes on industry topics, including autonomous vehicles and financial institutions. Until next time, thank you.
Carol (13:56)
Thank you, Charles.
Rebecca McCabe (13:57)
Thank you, Charles.
Outro
Thanks for getting all the way to the end of this week’s episode. Don’t forget to like, subscribe and share On Aon wherever you get your podcasts — and visit Aon.com to find out more about us.
We’ll be back next week with our Global Insight, which will focus on some of the issues surrounding the exponential growth of AI.