Electric power has become a bottleneck for AI and the trend is unlikely to ease soon as AI chips are increasingly power hungry and as data centers capacity is expected to double globally over next years, sparking a surge in power demand in many countries.
Data centers will then have no choice but to become more energy-efficient and secure new sources of power. The growing mismatch between power needs and recent low grid infrastructure capex should spark actions on both data center electricity demand and global power supply.
On the demand side, the first and main step towards improving AI energy efficiency will be to shift data centers from air to liquid cooling. With air cooling failing to maintain monster AI chips at normal working temperatures, the data center and semiconductors industries are pivoting towards liquid solutions that are expected to cut power usage by 40%.
On the supply side, cloud giants have been seeking to secure specific power supply agreements with utilities. Nuclear power specifically is emerging as a key solution to tackle the energy challenge as its reliability and predictability make it an excellent complement to renewable energies.
More globally, this sudden power demand pick-up from data centers should spark a 2x or 3x increase in global electricity demand and structurally change the power market dynamics.
This should reenergize expectations about electric grid capex and open a multi-year cycle of growth for most companies involved in the power management ecosystem.
With AI electricity consumption surging and utilities starting to have difficulties meeting demand, both cloud giants and utilities are actively looking at solutions to tackle the power challenge. Deploying new solar/wind capacity and building nuclear reactors (or reopening idle ones) are clearly part of the agenda. But these initiatives also represent a multi-year effort, suggesting…
The US gave a major boost to its nuclear industry yesterday as the Senate passed the ADVANCED (Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy) Act with overwhelming bipartisan support, and as the DoE announced it would fund up to $900 million to support the deployment of small modular reactors (SMRs). The ADVANCED Act is a…
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ISIN
XS2817746469
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USD
Type
Active Equity
Issuer / Rating
Morgan Stanley / S&P A+
Inception Date
16.07.2024
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Daily