As The AI Race Rages On, Depletion Of Energy And Water Resources Poses A New Threat

Big Tech’s race toward developing artificial intelligence (AI) has devastating, although possibly preventable, effects on the environment.

For example, Alphabet Inc’s GOOGL GOOG unveiling of Google AI Overviews. The automatically enabled feature eats up an estimated three watt-hours of electricity per search.

That’s 10 times the power consumption of a traditional Google search.

Additionally, AI facilities and data centers use substantial water to cool their servers and could consume 25% of U.S. power by 2030.

Demand for data center power is projected to more than double by 2030, largely due to AI. Although demand is substantial, energy providers are having difficulty keeping up with the pace, according to an article on Jacobin.

Virginia has a large data center market, powering companies such as Amazon.com Inc, Alphabet and Microsoft Corp MSFT. The state’s largest electricity company, Dominion Energy Inc D, has scrambled to meet the rapid increase in energy demand for data centers.

Market Implications: The substantial increase in energy demand to support AI has prolonged American use of coal amid electrification and sustainability efforts.

Coal company Evergy Inc EVRG services areas in Missouri, seeing increased demand from AI projects. Likewise, Duke Energy Corp DUK has seen rapid demand growth. Public Service Enterprise Group Inc. PEG is another name to watch considering it’s one of the largest electric companies in the U.S.

Nuclear plant provider Constellation Energy Corp CEG has been a top market performer in 2024 — its share price has nearly doubled — based on speculation of potential partnerships with tech giants.

Technology Solutions: Microsoft is developing a nuclear fusion generator in Washington state with start-up Helion, according to the Washington Post.

The Redmond, Washington-based company hopes to harness this fusion power by 2028 as a means to reduce AI-related carbon emissions.

"If we work together, we can unlock AI's game-changing abilities to help create the net zero, climate resilient and nature positive works that we so urgently need," a Microsoft spokesperson told the Post.

Microsoft also said that “by 2030, we will have 100% of our electricity consumption, 100% of the time, matched by zero carbon energy purchases."

The AI Race: The S&P 500 and NASDAQ’s rally in 2023 and 2024 can largely be attributed to investor optimism in artificial intelligence. The ten largest AI stocks now comprise over 28% of the S&P 500, double its weighting in the index from just 18 months ago.

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