DeepSummary
The podcast episode discusses the impact of the rapid advancement and adoption of artificial intelligence (AI) on global energy consumption. Will Su from BlackRock's Fundamental Equities team explains that AI's enormous computational power could lead to a significant increase in power demand, potentially up to 1000 terawatt hours of incremental electricity demand by 2030, or around 3% of global electricity at that time.
Su breaks down the three main drivers of AI's energy demand: training the large language models, querying these models, and powering the data centers that run the AI computations. He highlights the challenges of meeting this demand, such as the intermittency of renewable energy sources like wind and solar, and the need for a diverse energy mix including natural gas and even nuclear power.
Su also discusses the investment opportunities in the energy and utility sectors as they adapt to meet AI's power needs. He sees energy stocks as undervalued and poised to benefit from AI's technological gains, while utilities could benefit from grid growth after an initial period of heavy investments.
Key Episodes Takeaways
- Artificial intelligence's rapid advancement and adoption could lead to a significant increase in global energy demand, potentially up to 1000 terawatt hours of incremental electricity demand by 2030.
- Meeting AI's energy needs will require a diverse mix of energy sources, including renewables like wind and solar, as well as natural gas and potentially a resurgence of nuclear power.
- The energy and utility sectors may be undervalued and poised to benefit from the investment opportunities arising from AI's technological gains and the need to expand and upgrade energy infrastructure.
- AI's computational power and the resulting energy demand stem from the trillions of calculations required to train large language models and process queries, as well as the energy needed to power and cool data centers.
- The perception that the energy sector has limited growth potential may be misguided, given the increasing energy demands from AI and other technological advancements.
- The growth in energy demand from AI will necessitate investments in new renewable energy developments and improvements in long-distance transmission infrastructure.
- Energy companies are already leveraging AI and computational power for tasks like asset optimization, algorithmic trading, and seismic imaging for resource discovery.
- Utilities operating in favorable regulatory environments could benefit from the need to expand and upgrade energy grids to meet AI's power demands, after an initial period of heavy investments.
Top Episodes Quotes
- “We think there could be up to 1000 terawatt hours of incremental electricity demand for AI by 2030. In aggregate, you can see total Internet demand, including AI, make up six to 7% of global electricity demand by 2030.“ by Will Su
- “I think as governments around the world start to realize how much electricity growth there's going to be, there's starting to be a change in thinking. And in countries like South Korea, Japan, Italy, and here in the US, you're seeing regulators extending previously planned shutdowns of nuclear plans and even in some cases allowing them to restart after they've already been shut.“ by Will Su
- “Aside from that, I think the energy sector actually might be one of the most underappreciated beneficiaries for all the technological gains that'll come with better generative AI.“ by Will Su
- “At its most fundamental level, computations are just moving electrons around a semiconductor chip. But when you multiply that very small electric current by trillions of calculations, the energy demand adds up very, very quickly.“ by Will Su
Entities
Company
Product
Book
Organization
Person
Episode Information
The Bid
BlackRock
5/24/24
The world remains abuzz over artificial intelligence, but rapid advancement and adoption of the technology is poised to drive a significant increase in power demand, and this demand could redefine energy consumption as we know it. Today we ask the critical question: is the energy sector equipped for the AI power revolution?
Will Su, of BlackRock's Fundamental Equities team, is one of BlackRock’s leading voices on all things energy. Will walks us through the sector’s pivotal role in the build-out and future of AI and digs into the potential investment opportunities and challenges.
Sources: “Electricity Mix” Our world in energy, January 2024; “What is U.S. electricity generation by energy source?” Energy Information Administration, “OpenAI Presents GPT-3, a 175 Billion Parameters Language Model” Nvidia, 2020; GPT-4 Details Revealed, Patrick McGuinness, 2023; Data Centers Around The World, United States International Trade Commission 2021; “North America Data Center Trends H2 2023”, CBRE 2024; “Electric power sector CO2 emissions drop as generation mix shifts from coal to natural gas” EIA, 2021; “Electravision” JPMorgan, March 2024; “Fuel Mix” Ercot, March 2024; “Television, capturing America's attention at prime time and beyond” US bureau of Labor Statistics, September 2018.
This content is for informational purposes only and is not an offer or a solicitation. Reliance upon information in this material is at the sole discretion of the listener.
In the UK and non-European Economic Area countries this is issued by BlackRock Investment Management (UK) Limited who is authorized and regulated by the Financial Conduct Authority and in the European Economic Area this is issued by BlackRock (Netherlands) BV who is authorized and regulated by the Netherlands Authority. For full disclosures go to Blackrock.com/corporate/compliance/bid-disclosures
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.