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AI’s Immense Energy Demands

Shareholders getting in on the AI power trade stand to gain from the immense energy demands of AI technology. But those same demands will have challenging ramifications for the sustainability goals of technology companies — and put a massive new strain on the power grid.

Heat Waves and Power Grid Strain

Already this month, the major heat wave in parts of the Northeast, mid-Atlantic, and Midwest flashed an early preview of a potentially stifling summer that pushed the power grid’s load.

Data Centers and Long-Term Electricity Demand

Those demands pile onto the nationwide boom in data center development that’s leading to a surge in long-term demand for electricity, which has done the impossible — made the utilities trade look hot. With power-hungry AI systems, the energy trade is now the AI trade.

Generative AI and Energy Needs

To put AI’s energy needs in perspective, a ChatGPT query, on average, requires almost 10 times as much electricity to process as a Google search does. And if AI companies have their way, users engaging with software powered by large language models (LLMs) will make less energy-hungry — more efficient, you might say — web browsers obsolete.

Electrification and On-Shoring

The rise of generative AI coincides with a heightening of other factors increasing energy demand, from the electrification of transportation and infrastructure to the on-shoring of US manufacturing. Adding yet another acute demand: AI systems need power all the time. As Sam Mar, a senior adviser at Arnold Ventures, said, “They’re not going to be OK with intermittent energy for a data center.”

Heavy equipment excavates the site where a new Facebook data center is under construction in Eagle Mountain, Utah, U.S., May 14, 2019. (REUTERS/George Frey)

Sustainability and Fossil Fuels

For businesses that have sustainability commitments, that can result, perversely, in a lingering reliance on fossil fuels to keep their AI ambitions humming along. “They are going to fulfill their energy demand one way or another, whether it’s clean energy or fossil energy,” Mar said.

Future Energy Breakthroughs

The projections for AI-led energy demands are so high that technology companies are banking on ambitious energy breakthroughs to offset unsavory emissions and power the future. A literal deus ex machina.

Investments in Renewable Energy

Major cloud providers like Google Cloud, Microsoft Azure, and Amazon Web Services all invest in renewable energy to match their annual electricity consumption.

Clean Energy Projects

Clean energy projects attracting the attention of AI companies include fusion and geothermal. Other plans would plug massive data centers directly into nuclear power sites.

Critics and Innovation

Critics of AI exuberance point to potential wastefulness and avarice. But others see the AI-driven desperation for clean energy as a catalyst for energy innovation.

Accelerating Renewable Alternatives

“We need to pull forward the timeline of these technologies to make them more readily available and scalable to meet our rising energy demands,” Mar said.

Risks and Short-Term Challenges

If the most profitable and influential tech companies are helping accelerate renewable alternatives — even in the service of their far-fetched AI money machines — is that such a bad thing?

Still, there are risks in the short term.

Growing Demand and Fossil Fuels

Tamara Kneese, a project director at the nonprofit Data & Society, which studies the implications of AI, said demand is growing so fast that it’s slowing the transition away from fossil fuels while pushing companies to expand their data center footprint.

Energy Efficiency and Demand

Some green AI proponents contend that energy efficiency can alleviate some of the pressure, she said. But even boosted energy efficiency can’t make up for exponential growth in demand. And that same efficiency might invite even more power usage.

Climate Change and Energy Demand

If climate change accelerates energy demand, it won’t just be shareholders absorbing the risks of the AI energy transformation. Disruptions that may arise from insatiable resource needs have a way of spilling out from portfolios.

Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.

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