AI for AI: Optimizing Additional Infrastructure Build-out to Power Artificial Intelligence Data Centers

The paper presents a framework that links data‑center electricity demand growth, available generation capacity, and market‑clearing prices to explain rising electricity costs. It first uses a deterministic model to show how varying demand and supply growth estimates influence prices, then extends to stochastic processes that generate probabilistic distributions for supply, demand, and prices. Finally, it formulates generation expansion as a stochastic control problem, illustrating how uncertainties in load forecasts, development risks, and potential overbuilding can dampen investment incentives needed to stabilize prices.

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