In the end AWS S3 is just distributed file storage.
Setting up your own servers was not a bottleneck to the generation of internet companies that preceded AWS, and time has only made hardware cheaper, bandwidth more affordable, and OSS higher quality and more plentiful. It is easier than ever to host your own services, AWS just makes it cheaper up front thanks to their massive scale.
Point being, people aren't choosing AWS because AWS solves a problem they're incapable of solving, people are choosing AWS for pricing flexibility and faster time to market.
So when you say "what AWS does was previously done by every single IT department at every company across the globe" yes sure but (1) it was done worse in many cases, with data loss or significant downtime, and (2) there were fewer such companies by magnitudes, because of the cost barrier.
What AWS did was take a costly process, done inconsistently and to varying degrees of correctness across the business world, and make it available to everyone at a very high quality, with a innovative pricing schedule.
S3 has eleven 9s of durability. That alone is bonkers. Sure, let's say you replicate that and staff it up to keep it working ongoing.
I didn't say "replicate S3", I said "replicate a significant portion of AWS". A lot of the value of AWS doesn't come from using _a_ product, there are alternatives for most of what they offer, it comes from having the whole ecosystem of tools integrated and available in one place.
So now you need to go build out a highly available, redundant queuing service like SQS that supports FIFO delivery and up to 20k inflight messages.
And a highly available, redundant notification service with integrations not only with the web/email/etc but also SMS.
And a geographically redundant database service with multi-master, instant snapshots, point-in-time restore, etc, etc.
And... well, pick whatever other handful of AWS services you're using in your specific use-case.
And wrap it all behind tools for management. And hire a whole wackload of ops staff to keep it all going. And pay 10x as much because you don't get the economies of scale that AWS does.
I'm not ignorant of the difficulties in setting up generation and storage for electricity. But I'm also not ignorant of the absolutely massive task it would be to replicate AWS if you're it for more than a really expensive VPS hosting service. I would 100% choose to work on off-grid electricity generation before rebuilding AWS.
You entire take is based on the idea that AWS replacement has to be superbly reliable and scaleable, while your grid replacement does not.
Lets compare like for like, your grid replacement has to have redundancy so that generators can be repaired without power loss, it has to support megawatt scale spikes in demand in case several friends with electric cars come to visit, it has to have mean time between failure measured in years, withstand extreme weather, and be renewable. Also you need to have black start capacity and logistics to replace equipment promptly when it fails.
How is the cost for that going to compare to using the grid?