A.I.’s Insatiable Demand for Electricity

By Branko Terzic

Will the new demand for electricity from the expansion of data centers supporting artificial intelligence “A.I.” have an impact on climate change? Keeping in mind that electricity generation otherwise needs to increase to support US government policies of “full electrification” of the economy meaning replacement of gasoline and diesel for transportation and replacement of natural gas for space heating and cooking. A.I may be a minor issue.

A July 15 article in the Wall Street Journal “A.I.’s Insatiable Energy Use Drives Electricity Demands” by David Gelles explored that issue. Well, up until now it’s been either “economic growth” or maybe increasing “air conditioning” which have provided the “insatiable” demand for electricity.

Gelles cites a Goldman Sachs study which projects that A.I. will grow from 3% of energy usage today to 8% in 2030. That’s six years away leaving some time for additional new generation and necessary accompanying new electricity transmission construction. Except lead times for new power plants and new electric transmission line are way beyond the six-year window.

That means that new A.I. data centers will need to get power from the existing grid or maybe build their own power plants. Of course, it’s not clear whether the A.I. data center operators really want to get into the electric generation business at all. Better to leave that to the utilities.

As reserve capacity varies around the country A.I. data centers will first go to places where the electric utilities may have available capacity and it would be nice if they were located in cooler climes to reduce the air conditioning load too. Reducing the demand from existing customer would be an option too if lifestyle degradation wasn’t the side effect.

The nice thing is that A.I. data center owners can pay for what they need, and they can pay current prices. Under regulated rates state public service commissions can design special rates for the A.I. data centers based on their unique demand profiles and thus insure no cross subsidy from existing industrial or residential customers. They can also demand long-term contracts so that the public is not left with stranded investments should the A.I. data center boom not pan out. (That’s a possibility for some ill-advised investment, isn’t it?) If the new A.I data center needs new transmission or distribution facilities in addition to generation the PSC standard of “cost causer is the cost payer” will work just fine.

The Gelles WSJ article quotes Microsoft founder Bill Gates as saying that, when it comes to electricity demand, insights gained by A.I.?“…would deliver gains in efficiency that would more than make up for additional demand.”?That’s a hope not a fact yet.

Yet, Gates is in good company as Dr. Sultan Al Jaber, recent president of the United Nation’s COP28 and CEO of Abu Dhabi National Oil Company (ADNOC) recently wrote that: “Over the next five to ten years, AI is expected to enable breakthroughs in fusion, hydrogen, and modular nuclear power, long term battery storage and as-yet-unimagined climate solutions.”

That’s quite a prediction covering multiple technologies. While I believe that A.I. can handle and review data quickly uncovering patterns and relationships buried there, it’s not clear A.I. can solve complex problems better than experts fully engaged and informed on the issues. We know for certain that AI will require an increase in electricity supply. What is uncertain is whether A.I. will live up to its hype. I hope it does.

Read this article and more at https://www.brankoterzic.com/a-i-s-insatiable-demand-for-electricity/

The Honorable Branko Terzic is a former Commissioner on the U.S. Federal Energy Regulatory Commission and State of Wisconsin Public Service Commission, in addition to energy industry experience was a US Army Reserve Foreign Area Officer ( FAO) for Eastern Europe (1979-1990). He hold a BS Engineering and honorary Doctor of Sciences in Engineering (h.c.) both from the University of Wisconsin- Milwaukee.?

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