AI & Electricity: Two Perspectives – CleanTechnica

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To judge by the headlines, AI is the Second Coming. That may be so, but not everyone is convinced it is the blessing proponents claim it to be. Putting aside the wonders of the technology itself — such as they are — the data centers needed to make AI possible are voracious consumers of electricity. An analysis by the US Department of Energy suggests the power needed to run them could amount to 12% of America’s total electrical demand within a few years. Don’t care for government stats because they are crafted by “woke” bureaucrats with an agenda? Goldman Sachs has done its own analysis and arrived at a very similar result.

Renewables Leading Source Of New Electricity Generation

Paul Krugman this week pointed out that right now, at this very moment, about 90% of all new electricity generation is coming from renewables — wind and solar mostly. But the failed US administration is hellbent on slowing down the pace of new renewable installations and boosting coal and methane sources instead.

He suggests the policies of the so-called president and his minions are actually working against solving the administration’s self-declared “energy emergency” by favoring the most expensive (and dirtiest) energy sources there are. The result, Krugman says, will be higher electricity costs, not only for families already struggling with rising inflation, but also every manufacturing company in America that relies on electricity to make its products.

“Suppose that electric utilities manage somehow to get around Trump’s anti-technology roadblocks and build the extra generating capacity. Who will pay for all that spending? The answer, given the way we regulate these utilities…..is that the cost of adding capacity to power data centers is passed on to ordinary customers who have nothing to do with AI. This is already happening: Over the past 6 months retail electricity prices have risen at a 9 percent annual rate, four times as fast as overall consumer prices,” Krugman writes.

Once again, we find the capitalist model so reversed by people who call themselves conservatives is distorted by policies that actually make that model not function correctly. The Titans of Tech who are proclaiming that AI will be the greatest thing since sliced bread have not needed to take energy consumption into account when making their rosy predictions. That’s a problem for the utility companies to solve, right?

Maybe not. Last week, PJM Interconnection, the nation’s largest grid, said it “recommends that large data centers be required to bring their own generation.” But will they do so? Krugman suggests if they did, suddenly the tech companies would find a way to make their data centers a lot more efficient. “It’s obvious that any attempt to make AI more energy-efficient would lead to howls from tech bros who believe that they embody humanity’s future — and these bros have bought themselves a lot of political power. So I don’t know how this will play out. I do know that your future electricity bills depend on the answer,” Krugman said.

Cost Of Electricity & The Economy

As a Nobel Laureate in Economics, Krugman’s words carry a lot of weight. What worries him is that in the last 6 months, spending on data centers has exceeded consumer spending. But what if that spending on information processing is unsustainable? He sees a parallel between the great fiber optic revolution of the 1990s.

“Then as now, huge amounts of business investment were driven by enthusiasm about an exciting new technology. But the economic payoff to telecom technology didn’t come fast enough to prevent a huge bust in telecom investment. And this bust led to a recession and a long period of elevated unemployment.” Could the same thing happen again? Krugman certainly thinks it is a possibility — one that responsible leaders should not ignore.

“Will companies spending huge amounts on AI hit the brakes once they realize that they won’t be able to power their data centers?” he asks. “The point is that the mismatch between the immense amounts of electricity data centers are expecting to use and the generating capacity we’re likely to have isn’t just a problem for the companies sinking hundreds of billions into AI. It’s a threat to the economy as a whole.”

Earth Justice Study

Bill McKibben is saying much the same thing on his Substack channel this week and referencing a new report from Earth Justice that says consumers will be paying an extra three to six billion dollars a year for the privilege of keeping coal-fired power plants open past their expiration dates because of the bogus “energy emergency” nonsense coming from the banks of the Potomac.

“Forcing utilities to continue to operate unneeded and costly coal-fired power plants past their planned retirement increases the electric bills paid by homeowners and businesses. It also undermines the competitiveness of U.S. businesses such as manufacturing by raising electric rates. Anyone who pays an electricity bill in any region outside the Northeastern U.S. could be footing the bill. Electricity costs could increase by tens if not hundreds of millions of dollars per year in most states,” the report warns.

McKibben goes on to quote from Stanford professor Mark Z. Jacobson, who wrote about energy prices in the Wall Street Journal recently:

“How do the 12 highly renewable states rank in terms of electricity prices? Ten of them are among the 19 states with the lowest electricity prices. Seven are among the 10 states with the lowest prices. South Dakota, with renewables supplying 95% of demand, has the ninth-lowest electricity price. North Dakota (52% renewables) has the lowest. More renewables mean lower prices.

“Only California and Maine have high renewables and high prices. Why? California’s industrial price of natural gas, needed for electricity backup, is routinely the third-highest in the U.S. and twice the U.S. average. Plus, utilities have passed to customers the costs of wildfires from transmission-line sparks, undergrounding transmission lines, the San Bruno and Aliso Canyon gas disasters, retrofitting gas pipes following San Bruno, and keeping the Diablo Canyon nuclear-power plant open.

“California’s use of more renewables and batteries in 2024 than in 2023 increased grid reliability, however, as evidenced by 52% lower spot electricity prices this March to June, versus the same period in 2023. This slowed retail electricity-price rises.

“More renewable electricity generators and batteries reduce energy prices. Even in states with high electricity prices caused by other factors, renewables and battery storage keep prices lower than they otherwise would be.” [emphasis added]

Going On The Offensive

“The Democrats  need to be on the offensive, and sometimes they need to be offensive,” McKibben wrote, suggesting that higher energy prices could become an albatross they can hang around the neck of the Moron of Mar-A-Loco, after he promised on the campaign trail, “Under my administration, we will be slashing energy and electricity prices by half within 12 months, at a maximum 18 months.” McKibben thinks high utility bills could actually motivate voters even more than speculation about the relationship between the former reality TV star and Jeffrey Epstein.

“The Department of Energy literally put out a tweet last month with a picture of a hunk of a coal and the legend ‘She is the moment.’ But in fact coal is 18th century technology, and gas is 19th century technology, and now we’re in the 21st century where people know how to intercept the rays of the sun and the breeze in the air and turn them into the cheapest electricity the world has ever seen. And Trump’s getting in the way of that,” McKibben wrote. Amen to that.

As an editorial aside, the Chicken Little approach to governance practiced by the MAGAlomaniacs reminds me of a recent GEICO commercial that spoofs the consequences of poor decision making. Jimmy Breslin once wrote a book about the Mafia called The Gang That Couldn’t Shoot Straight which mocked the supposed geniuses of organized crime for their incompetence. But the Mafia dunces had nothing on this group of morons who consistently make the dumbest choices available. It would be funny if the consequences were not so serious.