How Electric Utilities Will Handle Booming AI Datacenter Demand

Joe Weisenthal (0:02)

Bloomberg Audio Studios.

Tracy Alloway (0:04)

Podcasts, radio, news.

Joe Weisenthal (0:17)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:22)

And I'm Tracy Alloway.

Joe Weisenthal (0:23)

So Tracy, a thing that keeps coming up is that all these AI data centers are going to use a lot of electricity. I keep hearing that.

Tracy Alloway (0:31)

Yes. Also, I just realized every time you use ChatGPT to write a satirical song, you're diverting energy away from someone turning on a light bulb or something like that.

Joe Weisenthal (0:42)

Potentially, something like that.

Tracy Alloway (0:44)

It's a zero-sum game.

Joe Weisenthal (0:45)

Yes, so be careful about your random ChatGPT queries. Although, I think the training is the more...

But maybe it's okay. I don't think it's that bad.

Tracy Alloway (0:58)

In the grand scheme of things, probably not. But there is this overarching conversation about AI's energy use. What exactly it is, this is a big question I have. How do you disaggregate AI servers from your run-of-the-mill software servers? How much it's going to consume?

How that capacity is going to get allocated and built out?

And I think there is this sense that we could end up going into very different, very extreme directions here. So you could have this great situation that because AI is a desirable activity, because it's profitable in many respects, that big tech ends up accelerating the energy capacity build out. Maybe they even start building more green technology capabilities in an ideal world. But then you have the polar opposite scenario where you need all this power to develop this technology. There isn't enough and it's sort of a race to the bottom where you have tech companies just trying to get energy wherever they can. Maybe they even start using coal and things like that. So it feels like there's two very different paths that we could be going down here.

Joe Weisenthal (2:08)

Yeah, and there's a lot here for us.

I remember Jigar Shah when we interviewed him at the Texas Tribune Conference over a year ago.

He brought this up. It's getting more and more attention. It keeps coming up on the side of episodes. Steve Iseman obviously recently talked about it. But I feel like it's time to make it a central part of the conversation and actually learn about numbers and where this power is generated from. And like, yeah, how much are we really talking about here?

We know the tech company is highly aware of it. There was a headline recently about Microsoft maybe wanting to do something with on-site nuclear development. They also...

Tracy Alloway (2:43)

No, they did do something. So I think they bought...

Joe Weisenthal (2:46)

Well, they put out a headline.

Tracy Alloway (2:47)

Well, didn't they buy a data center?

Joe Weisenthal (2:49)

Well, maybe.

Tracy Alloway (2:49)

Next to a nuclear power plant, a Susquehanna thing? I thought they did.

Joe Weisenthal (2:53)

Yeah, I think you're right about that. But then the other element, too, is you mentioned that one solution here is just fossil fuels and dirty energy, except that all these tech companies are very progressive minded, and they all have these net zero commitments by, we're going to get it all from windmills or sorry, wind turbines and solar and batteries and stuff.

Tracy Alloway (3:13)

Windmills next to AI servers would be an interesting one.

Joe Weisenthal (3:17)

But at some point, the rubber's got to hit the road with how realistic are their net zero commitments or how can they achieve them if they're engaging in this investment activity that is highly energy intensive?

Tracy Alloway (3:27)

No, absolutely. And you are seeing a lot of this discussion reflected in the conversation around AI investment at this point. So I think a lot of people feel like they missed that first wave of chips around Nvidia. So everyone's looking for the sort of second order investment play. And a lot of people now are talking about energy or cooling and HVAC. So we need to talk about it.

Joe Weisenthal (3:50)

Well, I am really excited because I do believe we have the perfect guest for this topic, someone who spent 12 years at Microsoft way before. It was hot to talk about how tech companies needed all this electricity and energy. He was the first energy hire at Microsoft. And he recently left last year. He left to start his own firm to work on this problem specifically. So we are going to be speaking with Brian Janous. He is the co-founder and chief strategy officer at Cloverleaf Infrastructure, a power development company that works closely with utilities on solving this problem. So, Brian, thank you so much for coming on Odd Lots.