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Power surge: AI, renewable energy, and the future of electricity

Power surge: AI, renewable energy, and the future of electricity

Update: 2024-06-11
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The podcast explores the significant increase in power demand driven by the rise of generative AI, data centers, and other technological advancements. Brian Singer highlights the generational growth in power demand, emphasizing the impact of AI-powered searches like ChatGPT, which consume 10 times more power than traditional Google searches. Carly Davinport emphasizes the importance of data centers in driving this growth, noting a projected 160% increase in data center power demand by 2030. The discussion then expands to other drivers of power demand, including electrification of vehicles and residential buildings, as well as industrialization. The podcast delves into the challenges of meeting this increased demand, focusing on the need for new power generation and grid infrastructure. Carly Davinport outlines the projected mix of new natural gas-fired power generation and renewable energy sources, particularly solar, coupled with battery storage. The podcast also explores the role of nuclear energy in meeting the demand, highlighting the potential for unregulated nuclear plants to strike deals with data center customers. The discussion concludes with a focus on the challenges and constraints facing the industry, including permitting and logistical constraints, equipment availability, and raw material availability, particularly copper. The podcast emphasizes the need for significant investment in power generation and grid infrastructure to meet the growing demand, highlighting the potential for a generational opportunity for regulated utilities and other players in the power industry.

Outlines

00:00:00
Generative AI and Power Demand

This Chapter discusses the impact of generative AI on power demand, highlighting the significant increase in energy consumption associated with AI-powered searches like ChatGPT. The chapter also explores the broader implications of this trend for power demand growth, including the role of data centers and other technological advancements.

00:07:36
Meeting the Power Demand

This Chapter focuses on the challenges of meeting the growing power demand driven by AI and other technological advancements. The chapter explores the projected mix of new power generation sources, including natural gas, renewables, and battery storage. It also discusses the role of nuclear energy in meeting the demand and the potential for unregulated nuclear plants to strike deals with data center customers.

00:14:51
European Power Demand and Challenges

This Chapter examines the power demand situation in Europe, highlighting the significant increase in demand driven by electrification and data centers. The chapter explores the challenges facing the European power industry, including the need for significant investment in grid infrastructure and the potential for a widening gap between supply and demand.

00:23:54
Constraints and Challenges

This Chapter focuses on the key constraints and challenges facing the power industry in meeting the growing demand. The chapter discusses the permitting and logistical constraints associated with building new power generation and transmission projects, as well as the challenges of ensuring affordability for residential customers. The chapter also highlights the potential bottlenecks related to equipment availability and raw material availability, particularly copper.

Keywords

Generative AI
Generative AI refers to a type of artificial intelligence that can create new content, such as text, images, audio, and video. It is based on machine learning models trained on massive datasets, enabling them to generate realistic and coherent outputs. Examples include ChatGPT for text generation, DALL-E for image creation, and Jukebox for music composition. Generative AI has numerous applications, including content creation, design, and research.

ChatGPT
ChatGPT is a large language model developed by OpenAI, known for its ability to generate human-like text in response to prompts. It is trained on a massive dataset of text and code, enabling it to engage in conversations, write different kinds of creative content, and answer your questions in an informative way. ChatGPT has gained significant popularity for its conversational abilities and potential applications in various fields, including customer service, education, and entertainment.

Data Center
A data center is a facility that houses computer systems and related equipment, such as servers, storage devices, and networking components. It provides a secure and controlled environment for data processing, storage, and distribution. Data centers are essential for businesses and organizations that rely on technology for their operations, including cloud computing providers, financial institutions, and government agencies. The increasing demand for data storage and processing has led to a significant growth in the number and size of data centers worldwide.

Electrification
Electrification refers to the process of replacing traditional energy sources, such as fossil fuels, with electricity. It encompasses various aspects, including electric vehicles, electric heating systems, and electric industrial processes. Electrification is a key strategy for reducing greenhouse gas emissions and transitioning to a more sustainable energy system. Governments and organizations worldwide are promoting electrification initiatives to address climate change and improve energy efficiency.

RepowerEU
RepowerEU is a plan launched by the European Union in response to the energy crisis, aiming to accelerate the transition to renewable energy sources and reduce dependence on fossil fuels. It includes measures to increase renewable energy production, improve energy efficiency, and diversify energy supplies. RepowerEU is a comprehensive strategy to achieve energy independence and climate neutrality in Europe, with a target of producing roughly 70% of electricity from renewables by the end of the decade.

Nuclear Energy
Nuclear energy is a form of energy derived from nuclear reactions, primarily fission. It involves splitting atoms to release energy, which is used to generate electricity. Nuclear power plants are highly efficient and produce large amounts of electricity with low greenhouse gas emissions. However, concerns about nuclear waste disposal, safety risks, and the potential for nuclear weapons proliferation have led to debates about the role of nuclear energy in the future.

Small Modular Reactor (SMR)
A small modular reactor (SMR) is a type of nuclear reactor that is smaller and more modular than traditional large-scale reactors. SMRs are designed to be factory-built and transported to the site, making them potentially faster and less expensive to deploy. They are also considered safer and more flexible than traditional reactors, with potential applications in remote locations and for providing electricity to industrial facilities.

Copper
Copper is a reddish-brown metal widely used in electrical wiring, plumbing, and other industrial applications. It is an excellent conductor of electricity and heat, making it essential for various technologies, including data centers, electric vehicles, and renewable energy systems. The increasing demand for copper in a rapidly electrifying world has raised concerns about potential supply shortages and price volatility.

Q&A

  • How is generative AI impacting power demand?

    Generative AI, particularly AI-powered searches like ChatGPT, are significantly increasing power demand due to the complex computations and large datasets required for their operation. This trend is driving a generational growth in power demand, particularly in data centers.

  • What are the key drivers of power demand growth beyond generative AI?

    Other key drivers of power demand growth include electrification of vehicles and residential buildings, as well as industrialization. These trends are contributing to a significant increase in electricity consumption across various sectors.

  • What are the challenges of meeting the growing power demand?

    Meeting the growing power demand presents significant challenges, including the need for significant investment in new power generation and grid infrastructure. The industry faces constraints related to permitting, logistics, equipment availability, and raw material availability, particularly copper.

  • What is the projected mix of new power generation sources to meet the demand?

    The projected mix of new power generation sources includes a combination of natural gas-fired power generation, renewable energy sources like solar, and battery storage. This mix aims to balance reliability needs with sustainability goals.

  • What is the role of nuclear energy in meeting the demand?

    Nuclear energy is seen as a potential solution to meet the growing demand, particularly due to its zero-carbon emissions and reliability. Unregulated nuclear plants are expected to strike deals with data center customers to provide direct power supply.

  • What are the key constraints facing the power industry in meeting the demand?

    Key constraints include permitting and logistical challenges associated with building new power generation and transmission projects, equipment availability, and raw material availability, particularly copper. The industry also faces the challenge of ensuring affordability for residential customers while supporting the growth of data centers.

  • How is the European power industry responding to the growing demand?

    The European power industry is facing similar challenges as the US industry, with a significant increase in demand driven by electrification and data centers. However, the industry is also facing constraints related to investment in grid infrastructure and the potential for a widening gap between supply and demand.

  • What are the potential implications of the growing power demand for the power industry?

    The growing power demand presents a significant opportunity for the power industry, particularly for regulated utilities and other players involved in power generation and grid infrastructure. The industry is expected to see a surge in investment and growth, creating a generational opportunity for the sector.

Show Notes

The demand for power, driven in part by the rise of generative artificial intelligence, is set to grow to levels not seen in a generation. Goldman Sachs Research’s Carly Davenport, Alberto Gandolfi, and Brian Singer discuss the drivers behind their forecast of a surge in global power demand and the investments required to meet that demand. 

Related articles on AI include AI is showing ‘very positive’ signs of eventually boosting GDP and productivity and Generative AI could raise global GDP by 7%.

For more: Goldman Sachs Exchanges.

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Power surge: AI, renewable energy, and the future of electricity

Power surge: AI, renewable energy, and the future of electricity

Goldman Sachs