Aging US power grid faces new pressure from AI, says Adaptive Insurance CEO Gulla

By Mia MacGregor

April 15 - (The Insurer) - The growing demand for electricity, driven by artificial intelligence, data storage and population shifts, is putting new pressure on the already aging U.S. power grid, according to Mike Gulla, founder and CEO of climate-focused parametric startup Adaptive Insurance.

“The U.S. power grid is struggling. It’s very old. It’s antiquated. It hasn’t been upgraded in a really long time,” Gulla said. “With advancements in technology and AI, machine learning, ChatGPT, Gemini, all these things are just consuming so much more power.”

Power outages cost American businesses an estimated $150 billion annually, and their ripple effects, he added, are especially severe for small businesses.

“They lose power for eight or 12 hours, and they lose all their income for the day,” he said. “That ends up being a much bigger impact to them than it is for larger corporations.”

The pressure on the grid, Gulla said, is not just from data-heavy tech.

“The amount of data storage that’s required, and the cloud compute that’s required to do these things, are all too much on the power grid,” he said.

“Then you combine that with all the consumers who are moving into areas more prone to weather events, and now you don’t have an even distribution of folks anymore. You’re actually getting more people putting more strain on the grid in a lot of places.”

Founded in 2024 and based in Austin, Adaptive Insurance aims to help businesses build financial resilience against climate and weather-related events using parametric coverage, which pays out a fixed amount based on a triggering event, such as a power outage.

Its new product, Grid Protect, is designed to serve small businesses affected by short-term outages.

“Power impacts everybody. Every business in the U.S. is at risk of a power outage at a moment’s notice,” Gulla said. “So it just made it easier for us to take something to market that people could understand and actually feel and see the value in.”

“We can come in and give them access to that capital base, whatever outage impact they want to buy against,” he explained. “It could be an eight-hour outage, 12-hour outage, a 16-hour outage. It really just depends on where they are.”

Adaptive also offers tools to help clients assess their risk.

“From an analytics perspective, we help them understand the likelihood of an outage,” Gulla said. “We know what happens with the grid. We know how often it goes down. We’ve built models that help us understand grid performance, and that makes it easier to help a business owner understand the investment they’re making.”

Unlike traditional insurance, Gulla said, parametric coverage offers a more direct and transparent experience.

“It’s different from traditional insurance products that people are forced to have and never want to use,” he said.

“Parametric actually gives businesses an opportunity to make an investment in something they do use. If the trigger happens, the payment is made. You get access to the capital. You use that capital for your business. It’s a smoother transaction.”