In an episode of The Brainstorm that was posted on Wednesday, Cathie Wood-led ARK Invest’s Sam Korus and Nick Grous explored the escalating energy demands triggered by the proliferation of electric vehicles and AI data centers.
What Happened: During their conversation, Korus and Grous tackled the pressing question of whether there will be sufficient energy to cater to the growing demands, particularly with the anticipated expansion of AI data centers.
They contrasted their forecast with that of McKenzie’s, asserting that their projection is considerably more aggressive. “I think their (McKenzie) current projection is something like 50 gigawatts of AI data center demand in 2030 and ours is exponential of that.”
While the projected figures might initially seem substantial, they are relatively modest within the context of global electricity generation, said Korus, adding that in the past five years, global electricity generation has grown at approximately 2.7% annually.
To meet the incremental demand from AI data centers in this forecast, the compound annual growth rate would need to increase from 2.7% to 3.4%.
This global perspective includes certain caveats, primarily whether such growth is feasible. For instance, China has been growing its electricity generation at a compound annual growth rate of around 5.7% annually.
In 2023 alone, China added approximately 350 gigawatts of electricity generation, surpassing the projected 2030 AI hardware power demand of just over 300 gigawatts. This underscores the importance of geography in the global conversation about data center collocation.
“So countries need to pick their game up but this should not be insurmountable in any way,” he stated.
The duo also speculated on the potential sources of this new energy, hinting that the U.S. could be a significant hub for AI data centers.
They also brought up the potential of nuclear energy as a feasible solution, considering that data centers necessitate a steady supply of electricity.
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Why It Matters: Last month, Microsoft co-founder Bill Gates dismissed concerns about the substantial increase in energy consumption due to AI systems. He asserted that the technology would ultimately offset its high electricity usage.
According to Gates, AI is expected to drive a significant reduction in emissions by over 6%, largely due to the tech industry’s readiness to invest in clean energy at a premium.
“The tech companies are the people willing to pay a premium and to help bootstrap green energy capacity,” he stated at the time.
Meanwhile, earlier this year, Arm Holdings Plc. CEO Rene Haas cautioned that without advancements in energy efficiency, AI data centers could account for up to 25% of U.S. power consumption by 2030.
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Photo courtesy: U.S. Department of Energy
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