Where Grid Stress Creates Corporate Stress

Just one of a rapidly expanding number of AI chatbots, ChatGPT recently reported close to 900 million weekly users (and Gemini is close behind):

As chatbots multiply, so too must our electrical grid.

Grid Stress

Demand for electricity is way up while the supply is not. Amazon experienced the problem in Oregon while ASML faces similar difficulties in the Netherlands.

Amazon

Hoping to establish four new data centers, Amazon first needed guaranteed electricity. However, contrary to (what Amazon says is) a contractual obligation, the PacifiCorp provided insufficient power to one of Amazon’s data campuses, no power to a second one, and “has refused to even complete its own standard contracting process” at two others. Consequently, Amazon filed a complaint against PacifiCorp with the state of Oregon.

ASML

Before chip equipment maker ASML can employ the 20,000 people for a plant in the Netherlands, it needs a power guarantee. Its application though is sitting with 12,000 others, each awaiting a connection. Like Oregon, the Netherlands has a congestion problem that might take 10 years to solve. Thay are already close to 2030 electricity projections.

Rich Country Demand

Bloomberg tells us that producing adequate electricity is a rich country problem. As per capita GDP rises, so too does demand for electrically powered devices that range from cars to robots to AI:

Our Bottom Line: Physical and Human Capital

Like all goods and services, electricity production takes us to the factors of production. We need the natural resources from our land and people for our labor. With capital, we have to consider the knowledge that grows our human capital and the machines that compose some of our physical capital. Both physical and human capital are crucial for artificial intelligence data centers where knowledge, technology, and electricity converge.

For a hint of the size and complexity of our electrical grid, the EIA (U.S. Energy Information Administration) gave us this map:

My sources and more: Thanks to my Bloomberg Green email for inspiring today’s post. From there, Politico had the Amazon story. And then finally, to read more about chatbots do take a look at Sherwood News here and here.