The power demands of AI will contribute to the largest growth of new generation capacity in history. This 18-page note evaluates the power implications of AI data-centers. Reliability is crucial. Gas demand grows. Annual sales of CCGTs and back-up gensets in the US both rise by 2.5x?
This is the most detailed report we have written to-date on the implications of AI, for power markets, gas and across capital goods.
We started by asking ChatGPT for examples where AI data-centers had installed their own power generation equipment. We received a very detailed list. All erroneous. All hallucinations. Hence there is still a role for a human energy analyst to address these important questions.
Forecasts for the energy demands of AI are broken down from first principles, within the energy demands of the internet, on pages 3-4.
Economics of AI data-centers are also broken down from first principles, across capex, opex, and per EFLOP of compute, on pages 5-7.
Data-centers primarily pull upon gas value chains, as uptime and reliability are crucial to economics, whereas only 6% of a data-center’s energy needs could be self-powered via on-site solar, per pages 8-9.
Combined cycle gas turbines are predicted to emerge as a leading energy source to meet the power demands of AI data-centers, and relative economics are quantified on pages 10-11.
The need for newbuild power equipment also hinges on maximizing uptime and utilization, and avoiding power grid bottlenecks, as outlined on pages 12-13.
To contextualize the growth that lies ahead, we have compiled data on US power generation installations, year by year, technology by technology, running back to 1950, including implications for turbine manufacturers, on pages 14-16.
The impacts of AI on US gas and power markets sharply accelerate US electricity demand, upgrade our US shale forecasts, especially in the Marcellus, and sustain the growth of US gas demand through 2035. Charts and numbers are on pages 17-18.
We look forward to discussing and debating these conclusions with TSE subscription clients.