As artificial intelligence drives electricity demand, geopolitical tensions reshape energy markets and countries reassess supply chains, the energy sector faces a growing challenge: meeting new needs while maintaining reliability, affordability and security.
Those questions framed the 10th annual Energy Summit, hosted by Rice University’s Baker Institute for Public Policy’s Center for Energy Studies and Baker Botts. Bringing together approximately 50 speakers over two days, the summit explored forces transforming global energy markets, from critical minerals and liquefied natural gas to electricity infrastructure and the rapid expansion of AI data centers.
“Energy questions are never just energy questions,” said Danny David, managing partner at Baker Botts, underscoring the sector’s connections to technology, geopolitics, economic competitiveness and public policy.
Throughout the summit, experts emphasized that adapting to changing demand and emerging risks will require infrastructure, investment and policy decisions with consequences lasting decades.
AI drives demand for power
The expansion of AI and data centers is creating new electricity demands, bringing energy companies into closer collaboration with technology firms and raising questions about where and how facilities should be built.
For Daniel Droog, vice president of Chevron Power Solutions, the connection is straightforward: AI requires computing capacity, and computing capacity requires reliable power. Chevron’s experience developing large-scale energy systems, he said, positions the company to meet this emerging demand.
Droog pointed to Chevron’s strategy of pairing its energy expertise with data center customers’ needs, including a power project announced with Microsoft in West Texas. For projects of this scale, companies must weigh shareholder returns alongside infrastructure requirements and community support.
Large energy companies bring assets, technical expertise and experience delivering complex projects, said Glenn Wright, former president and CEO of Shell New Energies U.S. and board director of NRG. Those capabilities are increasingly important as developers pursue facilities requiring vast amounts of electricity and dependable service.
But access to power is only one factor in choosing a location. Peter Hartley, the George A. Peterkin Professor of Economics at Rice and a scholar with the Center for Energy Studies, said data center siting also depends on electricity prices, land costs, water availability and access to fiber-optic networks.
Texas offers several advantages, including available land, an established energy industry and access to natural gas production and transportation. Yet pipeline and transmission constraints can affect fuel availability and electricity prices. Hartley noted that grid congestion can create substantial price differences across locations.
As data centers add large, relatively constant electricity loads, those differences become more consequential. Hartley argued that electricity prices should better signal where new generation and demand should locate, including by accounting for transmission losses.
Some developers are responding to rising demand by bringing their own power rather than relying entirely on the grid. But on-site generation does not eliminate the need to plan for the wider electricity system.
Droog described Chevron’s approach as “bring your own power,” with the potential to connect new resources to the grid over time. Thoughtful integration can strengthen grid reliability rather than leave facilities operating in isolation.
Managing electricity costs and reliability also requires navigating price volatility. Solar generation can push wholesale prices down during sunny hours, for example, while wholesale prices may rise when production falls and demand remains high. Wright highlighted the role of risk management, physical assets and contracts in managing price swings and differences across electricity markets.
Communities are also weighing the economic benefits of data centers against concerns about water use, infrastructure and local resources. New projects can expand tax bases and spur infrastructure investment, but realizing those benefits requires responsible planning.
Geopolitics and the changing energy landscape
The challenges facing data center developers reflect broader pressures across the energy sector. Geopolitical uncertainty can affect everything from oil and natural gas supplies to critical minerals and advanced manufacturing.
Ken Medlock, senior director of the Center for Energy Studies and the James A. Baker III and Susan G. Baker Fellow in Energy and Resource Economics, emphasized that energy disruptions can reverberate throughout the economy. The effect of the disruption in the Middle East extends beyond oil and natural gas to materials and products essential to modern industries, including fertilizers, helium, aluminum and semiconductors.
That interconnectedness complicates efforts to prepare for disruptions. Mark Finley, an energy analyst and nonresident scholar with the Baker Institute, examined strategic petroleum reserves, alternative transportation routes and conservation measures. Existing safeguards may not address every vulnerability, particularly when disruptions affect refining capacity or critical infrastructure.
The discussion highlighted a central policy challenge: Preserving market flexibility while determining when government intervention may be needed to protect energy security.
Competition over critical minerals adds another dimension. Leslie Beyer, former assistant secretary for land and minerals at the U.S. Department of the Interior, discussed the importance of domestic production, permitting and resilient supply chains. China’s diversified energy strategy — spanning renewables, coal, nuclear power and domestic oil and gas — illustrates how countries pursue security through different combinations of resources.
Balancing affordability, reliability and investment
Speakers repeatedly returned to the challenge of balancing affordability, reliability, energy security and climate goals. These priorities can reinforce one another, but they can also create trade-offs that vary by region and over time.
Permitting and infrastructure development are central to navigating those trade-offs. New power plants, transmission lines, pipelines and mineral supply chains require time and capital, even as demand and geopolitical conditions shift. Because energy infrastructure lasts for decades, today’s decisions can shape future costs and resilience long after current market conditions change.
Medlock said scenario analysis can help businesses and policymakers navigate uncertainty without relying on a single forecast. Evaluating a range of possible futures allows them to identify vulnerabilities and make more resilient decisions.
From global markets and national policy to emerging technologies and local infrastructure, the summit underscored how closely connected today’s energy challenges have become. Whether securing fuel supplies amid geopolitical disruption or providing reliable electricity for AI data centers, the task is to meet changing needs while managing economic, technological and political uncertainty.