I never used to listen to very many podcasts. But lately I've started doing it while heading to/from meetings, either in the car or on the train. This past week I listened to a Bankless podcast talking about crypto and AI, and one of the arguments that was made was that it's probably a safe bet to assume that we're going to need dramatically more compute and electricity in the future.

This seems obvious enough. If you recall, there's no such thing as a wealthy, low-energy nation. If you're a wealthy country, you consume a lot of energy. And that's why Build Canada recently argued that we need a kind of energy revolution. By 2050, it's likely Canada will have 2-3x the electricity demand that we have today. So today I thought I would share a few related charts.

Here's electricity production by source across the world. Coal dominates.

Looking at renewables more closely, we again see that wind and solar are making a run for it. And if you consider that solar is one of the fastest growing energy sources, it's not inconceivable that it will start to become a more dominant source in the near term. In the US, solar PV projects make up the largest share of new planned generation capacity.

But the US is not winning this race today. Right now it's China. (Chart below sourced from here.) They have the largest cumulative solar capacity, followed by the EU, and then the US. That said, coal still forms a dominant part of China's energy mix, and the country continues to construct coal-fired power plants to meet its short-term energy needs.

It's unfortunate that Canada is not on this list. That needs to change.

Cover photo by Benjamin Jopen on Unsplash

Here's an interesting presentation by Albert Wenger, who is a partner at Union Square Ventures. He starts by showing a logarithmic chart comparing per capita energy consumption and GDP per capita. Then, by way of a clear empty area in the chart's data points, he makes the argument that there's no such thing as a wealthy, low-energy nation. If you're a wealthy country, you consume a lot of energy. That's just how it works. He then goes through a number of historical energy breakthroughs, landing on the point that, today, we are in need of much more energy. In other words, we need another energy breakthrough. We need it because we're still burning fossil fuels and putting too much carbon into the atmosphere, and because we have really big energy needs: everything from data centers to the full electrification of our homes, buildings, and cars. One piece of good news is that we are seeing exponential growth in solar energy. Today, our global install base is still relatively small, but the thing about exponential growth is that it can creep up on you fast.

It's an interesting presentation. And if you'd prefer to read his talk instead, which is/was my preference, you can do that here.

Last month, the Berkeley National Laboratory, under contract with the US Department of Energy, published this report estimating total data center energy usage across the country. It also forecasted future demand out to 2028.

As you can see, in 2018, total electricity consumption by US data centers was estimated at approximately 76 TWh or 1.9% of the US total. In 2023, consumption more than doubled to 176 TWh or 4.4% of the US total. And by 2028, this is expected to further jump to somewhere between 6.7-12% of the US total.

Here's some commentary from the report:

With significant changes observed in the data center sector in recent years, owing to the rapid emergence of AI hardware, total data center energy use after 2023 is presented as a range to reflect various scenarios. These scenarios capture ranges of future equipment shipments and operational practices, as well as variations in cooling energy use. The equipment variations are based on the assumed number of GPUs shipped each year, which depends on the future GPU demand and the ability of manufacturers to meet those demands. Average operational practices for GPU-accelerated servers represent how much computational power, and how often AI hardware in the installed base is used, to meet AI workload demand. Cooling energy use variations are based on scenarios in cooling system selection type and efficiency of those cooling systems, such as shifting to liquid base cooling or moving away from evaporative cooling. Together, the scenario variations provide a range of total data center energy estimates, with the low and high end of roughly 325 and 580 TWh in 2028, as shown in Figure ES-1.

This strikes me as being an important macro trend and a big deal. All signs point to more data centers being needed. And before we know it, they're going to represent a meaningful chunk of total electricity usage.

Note: TWh = terawatt hour = one trillion watt hours