Electricity

Electricity was not invented, but discovered and harnessed. The understanding and use of electricity is the result of the contributions of many scientists over the centuries. One of the first significant practical applications of electricity was the electric telegraph. Samuel Morse and other inventors developed systems that enabled long-distance communication using electrical signals. The first successful demonstration of a telegraph took place in 1837, and the first commercial telegraph line was completed between Washington, D.C., and Baltimore, Maryland, in 1844. A world without electricity is unimaginable today. In the wake of the hype surrounding artificial intelligence (AI), electricity – or rather the need for large quantities of it – is currently driving a second wave of investment.

The almost overnight increase in power demand from data centers is now outstripping the available power supply in many parts of the world. This dynamic is leading to years-long waits for businesses to access the grid, as well as growing concerns about outages and price increases in the densest data center markets. In the United States, data centers are projected to consume 8% of all electricity by 2030, up from 3% in 2022, according to Goldman Sachs. This represents an unprecedented increase in electricity demand not seen in a generation. When operating continuously, these data centers have the capacity to consume a total of 508 terawatt hours (TWh) of electricity annually, which exceeds the total annual electricity production of countries such as Italy or Australia. Globally, energy consumption by data centers is expected to exceed 1,580 TWh by 2034, which is equivalent to the current electricity consumption of the entire nation of India.

Leading cloud service providers, Amazon.com Inc, Microsoft Corp and Alphabet Inc’s Google, have set ambitious goals to run their data centers entirely on green energy-Amazon by next year and Google and Microsoft by 2030. All three companies are developing technologies to reduce power consumption and balance grid loads more efficiently. These efforts include improving the efficiency of chips and servers, optimizing the layout of devices to minimize cooling needs, and shifting loads to areas where green energy is more available.However, some industry leaders, such as OpenAI CEO Sam Altman, argue that a major breakthrough in energy supply, likely through nuclear power, is necessary to achieve these goals. Both Microsoft and Amazon are investing in nuclear power, with Amazon recently acquiring a nuclear-powered data center in Pennsylvania and being open to further investment in this area. Microsoft recently admitted that its AI expansion is jeopardizing its long-standing goal of becoming carbon negative by 2030.

The increasing demand for data centers, along with significant investments by energy companies like Dominion in new substations, transmission lines and other infrastructure, will drive up energy prices for consumers, experts say. The cost of these upgrades is typically spread across all electricity customers in a region and appears as a line item on monthly electricity bills. Goldman Sachs estimates that U.S. utilities will need to invest about $50 billion in new power generation capacity to support data centers, which will increase both wholesale energy and retail prices. This will lead to delays in the adoption of AI while also increasing inflation

Chat GPT queries are 6-10 times more power intensive than traditional Google searches. Modern data centers often contain thousands of Nvidia Corp.’s coveted H100 chips, which are at the center of the generative AI revolution. Each H100 chip consumes up to 700 watts of power, nearly eight times the energy used by a typical 60-inch flat-screen TV.

According to a Dominion representative, electricity costs, including grid improvements, are allocated to the different customer classes, from residential to industrial customers, according to the actual cost of supplying each class. As a result, residential customers have seen their share of transmission costs decrease in recent years, while the share of data centers has increased.

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