Data Center Debate: Are Energy Bills About To Explode?

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**Ed Elson** (1:15)
Today's number, 400 That's how many meters long the world's largest ever tiramisu was. A record set last week by a consortium of 100 Italian chefs. Italy still faces severe economic challenges, such as crippling debt and a stagnant economy, but points for sticking with the whole food thing.
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Welcome to Prof G Markets. I'm Ed Elson. Apologies to our Italian listeners. It is April 29th. Let's check in on yesterday's market vitals.
The S&P and NASDAQ both fell due to a Wall Street Journal report that OpenAI missed its revenue and user growth targets. That news sparked a tech sell-off, with Nvidia falling more than 1% and Oracle and CoreWeave dropping 4%. Notably, Microsoft actually rose 1% ahead of its earnings, which are due tonight. Meanwhile, oil prices rose as negotiations with Iran continued to stall and the Strait of Hormuz remained shut. And finally, the United Arab Emirates announced it is leaving OPEC, putting more pressure on the oil cartels' already strained supply.
Okay, what else is happening? Alphabet, Amazon, Meta, and Microsoft are expected to spend more than $650 billion this year on data centers. And by 2030, data centers are expected to use twice as much electricity as they do today, enough to power France and Germany combined. The problem, though, is that the grid might not be able to handle it. Nearly 2300 gigawatts of generation and storage capacity are currently stuck in the pipeline, more than the country's entire installed power capacity. Meanwhile, Americans are already seeing their power bills climb. In fact, residential prices could rise 15 to 40 percent over the next five years. As a result, 14 states are considering moratoriums on data centers. So this leaves us with a multi-trillion dollar question. And that is, can the AI build out actually happen the way Wall Street hoped that it would? Well, to discuss this, we are joined by a panel of experts, Jigar Shah, former director of the Loan Programs Office at the US. Department of Energy, and also Jon Parrella, CEO at Terraflow Energy. Jigar and Jon, thank you so much for joining me. Jigar, I'll start with you. When you look at the AI build out right now, and sort of the obstacles that are in its way, between compute, between people's feelings and political sentiment towards the technology, and then also energy, what do you consider to be the most important obstacle, the thing that's most in its way?

**Jigar Shah** (4:18)
Yeah, you know, it's such a crazy thing, right? You know, when you think about the five different bottlenecks you have to data centers, right? So there's the grid, right? Then there's transformers, then there's GPUs, then there's memory, and then there's CPUs now. It looks like they're short, right? Right. They can't build more than 50 gigawatts of data centers between now and 2030 because of limitations on GPUs, memory and CPUs, right? But if you go to communities, they're creating havoc at the level of 500 gigawatts across the country. So they are making empty promises to people across the country to disrupt their communities when they don't have the GPUs to fill it, right? And so that's, I think, what's pissing everybody off. I think people are just saying, if you're going to be a trillion dollars in size and you're going to be booing the entire US economy, how come not a single analyst actually seems to know anything about what's possible? And everyone else is basically like feeding the hype cycle all day, right? I'll give you an example. In the state of Texas, they are suggesting an official ERCOT letterhead, which is the transmission operator in Texas, that the load queue could be 300 gigawatts, right? Now, mind you, Texas is 70 gigawatts.