The power grid is going to be an incredible bottleneck.
1) It started with years of underinvestment and NIMBY policies like California’s liability laws and Vermont voting against lines to provide hydro-electric power to Massachusetts.
2) The spike was already set in motion by the green transition and the shift away from coal. This is necessary but doing it incorrectly (leading to blackouts or prices hikes) can stoke public resentment. The clean energy lobby also led to a general public misunderstanding of the drawback of wind and solar, while further NIMBY efforts make it tough to integrate them into the grid. The scope of investment needed to switch to green energy is staggering.
3) AI has hit at the worst possible time for the grid. The International Energy Agency said in January a request to ChatGPT requires 2.9 watt-hours of electricity on average, that is nearly 10 times as much as the average Google search.
Here is the CEO of ARM:
AI models “are just insatiable in terms of their thirst … the more information they gather, the smarter they are, but the more information they gather to get smarter, the more power it takes.”
Without greater efficiency, “by the end of the decade, AI data centers could consume as much as 20% to 25% of U.S. power requirements. Today that’s probably 4% or less,” he said.
ARM CEO Rene Haas
Now some efficiency is undoubtedly coming but we’ve still only scratched the surface of the potential for AI and I think a robotics revolution will follow it. That could super-charge electricity demand even further.
Here’s OpenAI CEO Sam Altman:
“We still don’t appreciate the energy needs of this technology. There’s no way to get there without a breakthrough. We need fusion, or we need like radically cheaper solar plus storage or something at massive scale.”
Sam Altman
What will happen?
In the US and other places with the capability, they will undoubtedly turn to natural gas which is relatively easy to build and scale. In other places, they will have to extend the life of coal plants, or build more.
At the same time, there will be a race to build more green energy, nuclear energy, batteries and grid capacity. All of these things will require incredibly-intensive mining for things like copper, aluminum, nickel, lithium and uranium. The problem is that mines take 10+ years to build and we don’t have the time.
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