The sudden spotlight on Chinese AI startup DeepSeek, which claims greater efficiency than rivals, adds fresh chaos to gaming out data center power demand growth.

Why it matters: Energy firms ranging from small reactor startups to incumbent utilities to gas producers — and plenty in between — see data centers as a critical U.S. market.

• Electricity needed to train and use AI models is becoming a big variable for carbon emissions — especially if fossil fuels play an outsized role fueling the infrastructure.

The big picture: "The emergence of DeepSeek adds a new layer of uncertainty on the pace and magnitude of electric demand growth in the U.S.," John Larsen, a partner with the energy research firm Rhodium Group, said via email.

📉 Threat level: Share prices of AI-exposed energy companies took a beating yesterday.

• "The DeepSeek model is more energy and capital efficient which calls into question the significant electric demand projections for the US," Jefferies analysts said in a note.

What they're saying: "It appears that DeepSeek demonstrates that training high performance models can take far less electricity than previously thought," notes Larsen, the Rhodium Group partner.

• "At the same time, DeepSeek also greatly reduces the cost of using AI inference which could lead [to] consumers using it a lot more and that then leads to more electric demand," he said.
• Arvind Ravikumar, an energy modeling expert at UT-Austin, thinks DeepSeek is already puncturing some projections.
• "This is a good time to take stock of unrealized efficiency gains in AI compute before we end up building a bunch of 30-year gas plants," he said on Bluesky.

🏈 State of play: Projecting data center needs was already fraught before DeepSeek emerged.

• Estimates vary widely. A late 2024 Energy Department report projects them accounting for 6.7% to 12% of U.S. electricity by 2028, up from 4.4% in 2023.
• But what's clear is that tech companies are planning massive capital investments.

👟 Catch up quick: DeepSeek's reported breakthroughs have stunned Silicon Valley and are shaking up Wall Street.

• They were accomplished at a fraction of what the U.S. giants are spending and despite export bans on top-of-the-line chips, Axios' Scott Rosenberg reports.
• DeepSeek hit No. 1 on Apple's App Store a week after the Jan. 20 release of its R1 model, which works along similar lines to OpenAI's o1.
• Presented with a complex challenge, it takes time to consider alternate approaches before picking the best solution — and it explains its chain of reasoning to users, Scott reports.

The bottom line: "The future of electricity demand in the U.S. due to AI in data centers is frankly uncertain ... I think this is a key example of that," said Tanya Das, who directs the energy program at the Bipartisan Policy Center.

The shares of several energy companies working, in different ways, to tap the growing data center market took a beating yesterday.

• You can see a few above, and CNBC has more.

Yes, but: Traders, C-suites and analysts are still absorbing the DeepSeek info, so plenty could change.

The White House budget office is ordering federal agencies to pause grants, loans and other financial assistance.

Why it matters: A wide-ranging new memo name-checks the "green new deal."

• That's the sweeping lefty blueprint from a half-decade ago that never became a specific law.
• But Trump uses the term to describe Biden-era clean energy efforts including the 2022 climate law.

🔍 What we're watching: Whether it affects climate science research at universities and nonprofits that rely on grants from NOAA, NASA, DOE and other agencies.

And Biden's climate strategy looked to stitch low-carbon energy into government-wide decision-making.

🗞️ Driving the news: The Office of Management and Budget memo says agencies must gauge their programs' consistency with Trump priorities and executive orders.

Yes, but: While plenty remains unclear, some of the freeze is already required elsewhere.

• One of Trump's opening EOs paused spending under the 2021 infrastructure law and 2022 climate law.
• And, per Bloomberg, a Jan. 20 Energy Department memo broadly halted new grant awards, loans, procurement announcements and more.

The other side: Top Capitol Hill Democrats blasted the move, calling it unlawful.

What's next: Agencies have until Feb. 10 to give OMB "detailed information on any programs, projects or activities subject to this pause."

Andrew Freedman contributed

Helion Energy, a prominent fusion startup, added more boldface names to its stable of backers with a $425 million Series F round.

Why it matters: Investors see a decent chance for the tech to move well beyond labs and demo projects.

Driving the news: New backers include Lightspeed Venture Partners and the SoftBank Vision Fund.

• They join prior investors in the Washington State-based firm including OpenAI CEO Sam Altman.
• The latest round values the startup founded in 2013 at $5.4 billion. It has now raised over $1B.

Catch up quick: Microsoft signed a power purchase deal with Helion in 2023 for at least 50 megawatts starting in 2028.

What we're watching: Via Axios Pro's Alan Neuhauser, Helion has said its Polaris fusion system could generate more electricity than it consumes as soon as this year — a "net generation" benchmark thought to be years away at other startups.

That's how much power capacity Chinese firms added to countries last year in its Belt and Road infrastructure initiative, Wood Mackenzie found.

Why it matters: It's a record for the initiative launched in 2013 — and another reminder of energy's central role in geopolitics.

• Renewables were 52% of the new capacity, "reflecting a clear shift towards greener technologies," Woodmac said.

"In my opinion, OPEC+ would start to seriously think about bringing oil production back online if Brent were to trade in the $85.00 to $87.50 range which would equal WTI Crude Oil around $81.50 to $84.00."

Why it matters: That's well above where prices are trading right now.

• That's another way of saying who knows whether OPEC+ will indeed start adding barrels in April as planned.