Washington, DC – Oct 21, 2024 Paolo von Schirach, President, Global Policy Institute; Professor of Political Science and International Relations at Bay Atlantic University, explained that AI revolution is gaining momentum in America. NVIDIA, maker of the coveted chips which constitute AI’s key components (85% of global supply), from nowhere reached a market capitalization of about $ 3.4 trillion, becoming overnight the second most valuable company in the world –higher valuation than Microsoft or Saudi Aramco. Having taken notice of the unfolding revolution, all the major tech companies have jumped into the AI space hoping to reap incredible profits.
That said, the AI revolution has created an unforeseen major problem for tech companies. AI data centers consume massive amounts of electricity. To date, America simply does not produce enough electricity to power the numerous AI data centers the tech companies want to develop as soon as possible. Big tech already consumes 4% of all electricity in the U.S. Soon enough it will be 9%. Where will all this additional electricity come from?
Any realistic projection of increased electricity supply in the U.S. does not come even near to the amounts AI data centers will need to operate at full capacity. Even if we could assume a dramatic increase in solar and wind electricity supply, the enormous power needs of the AI industry will not be met.
That said, the big tech companies are developing their strategies. And they have a basic element in common: nuclear power.
According to a CNBC report, Google indicated that it would focus on small nuclear reactors developed by Kairos Power, to “deliver on the progress of AI.” The first small reactor dedicated to support Google should become operational in 2025.
And Microsoft is also going nuclear. Part of the once defunct Three Mile Island nuclear power plant in Pennsylvania, site of a major accident many in March 1979, will come back online to supply Microsoft, based on a deal with Constellation, the provider.
According to the CNBC report above cited, Michael Terrell, senior director for energy and climate at Google, recently stated that: “The grid needs these kinds of clean, reliable sources of energy that can support the build out of these technologies….We feel like nuclear can play an important role in helping to meet our demand, and helping meet our demand cleanly, in a way that’s more around the clock.”
Amazon will follow a similar path, via a deal with Dominion Energy whereby small nuclear reactors will supply the tech giant that already operates an enormous cloud business.
But here is the problem. In the U.S. building “classic” nuclear reactors has become a horrendously expensive, time-consuming enterprise. There are endless lists of environmental assessments, permits, licenses and insurance requirements. Not to mention almost guaranteed lawsuits brought by environmentalists and other lobbies aimed at blocking construction. Therefore, it is impossible to assume that the construction of new, big reactors will satisfy future AI industry’s needs.
Small nuclear reactors look much more promising. They are safe and more cost-effective. Still, this technology, while it passed many important tests, is still literally in its infancy. It is just not credible to posit that all or most new, electricity hungry, AI center will have all the power they need as soon as they become operational. Unless, of course, some new, disruptive energy production innovation comes to the rescue. Let us hope for innovation!
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