TECH - AI Data Centers EVs to Lead New Surge in Energy Demand | Benzinga
Source: Streetwise Reports 07/09/2024
With Electric Vehicles (EVs) and a swarm of new products requiring more power, experts agree that a surge in demand is coming, and soon. Here are several companies that can get you exposure to this important and growing resource.
But the nation's largest utility companies are warning the surge could be unlike anything seen since the widespread adoption of heat pumps and air conditioners pushed demand sky-high in the 20th Century, according to a June 30 piece by Spencer Kimball for CNBC.
This time the engine of growth will come from power-hungry artificial intelligence data centers, EVs, and the expansion of computer chip manufacturing, he wrote.
"In absolute terms, the growth in electricity demand from these two segments, EVs and data centers, is equivalent to the total electricity demand of a country such as Turkey, that the U.S. has to take on" said Rystad Energy analyst Surya Hendry in a June release on the issue. "This growth is a race against time to expand power generation without overwhelming electricity systems to the point of stress. If you envision cleaner roads and sustainable AI for the future, renewable energy is the key to meeting this demand and providing the scalability needed for U.S. power systems to endure."
The tech giants — Amazon, Alphabet's Google, Microsoft, and Meta — are looking for more power as they bring data centers online that can require as much as a gigawatt of electricity, Petter Skantze, vice president of infrastructure development at NextEra Energy Resources, told CNBC.
"To put that in context, a gigawatt is equivalent to the capacity of nuclear reactor" the CNBC report noted.
Skantze's parent company is NextEra Energy, the largest power company in the S&P utilities sector by market capitalization.
"This is a different urgency coming" Skantze told the Reuters Global Energy Transition conference in New York recently, according to CNBC. "They need this load to drive the next iteration of growth. They're showing up now at the utility and they're banging on the door and they're saying I need to put this resource on the grid."
The Spark: AI Data Centers, EVs Demand Power
Rystad Energy's research predicted that data centers and EVs alone will add 290 terrawatt hours (TWh) of new demand by 2030.
"Overall, the combined expansion of traditional and AI data centers, along with chip foundries, will increase demand cumulatively by 177 TWh from 2023 to 2030, reaching a total of 307 TWh" noted Rystad, an independent research and energy intelligence company. "Despite data centers currently representing a relatively modest portion of total electricity demand in the U.S., this marks a more than two-fold increase compared to 2023 levels, which stood at 130 TWh, highlighting the efforts of the U.S. to position itself as a global data center hub."
Rystad said the reliance on coal in the U.S. has diminished. This is expected to continue while overall power generation is expected to rise.
"The power mix will increasingly be defined by renewable energy growth and declining coal generation, supported by the Inflation Reduction Act and lowering costs for solar and wind generation technologies" analysts wrote. "Most states are embracing renewable energy and natural gas in comparison to coal plants, in an effort to become greener and achieve climate goals. Overall, natural gas will continue to dominate much of the US power mix for the next decade, but renewable energy will play an increasingly important role."
Solar PV capacity is expected to increase by 237 gigawatts (GW) between 2023 and 2030, while wind capacity is projected to grow by 78 GW, Rystad said. The strong growth from these two sources should be sufficient to meet the rising power demand brought by data centers and EVs in the US, while continuing to displace coal in the generation mix.
Southern Co., the second-largest utility in the U.S. by market cap, headquartered in Atlanta, said supplying the demand needed all of America's future needs is a matter of economic and national security.
Chief Executive Officer Chris Womack told CNBC's Kimball that nuclear power also has "got to be a big part of this mix."
"Energy security brings national security, also brings about and supports economic security" Womack said. "We've got to balance and meet the needs of sustainability. But — to ensure that we can continue to have a growing, a thriving economy — we got to get the energy piece right."
There are some companies that investors can look at to get exposure to this revolution, including one that focuses on renewable sources, another that has created a sustainable battery that could help store all of this energy, and uranium explorers looking to supply future nuclear reactors.
Revolve Renewable Power Corp.
Revolve Renewable Power Corp. (OTC: REVVF) was formed 12 years ago to capitalize on the growing global demand for renewable power. It develops utility-scale wind, solar, and battery storage projects in the US, Canada, and Mexico. Its second division, Revolve Renewable Business Solutions, installs and operates sub-20MW "behind the meter" distributed generation (or "DG") assets.
Its portfolio includes 11 Megawatts (net) of operating assets under long-term power purchase agreements across Canada and Mexico covering wind, solar, battery storage, and hydro generation; a 3 Megawatt (MW) CHP project and a 450 Kilowatt peak (kWp) rooftop solar project that are both under construction and expected to be operational later this year; and a diverse portfolio of utility-scale development projects across the U.S., Canada, and Mexico that have a combined capacity of over 3,000 MWs, as well as a 140 MW+ distributed ...