The technological and business disruptions caused by AI technologies, especially generative AI applications over the past year, raise a global issue that the world has yet to consider: How will humanity be able to handle the increasing energy consumption required for such heavy processing? Electrical grids around the world were built in an earlier era and were designed to supply electricity to homes, factories, and businesses.
However, in the past decade, these networks have had to deal with two types of new demands that are significantly larger than their supply capabilities: first, charging electric vehicles, and second, supporting the electricity needs of data centers, including the cloud infrastructures that run data centers. Heavy arithmetic. .
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Yair Snir, Managing Partner, Dell Technologies Capital, Israel and Europe
(Image: Dell Technologies Capital)
No wonder consulting firm Grid Strategies expects U.S. electricity demand to double over the next five years compared to forecasts published last year. Furthermore, electricity shortages delay the opening of new server farms by two to six years.
Tech giants have started an electrical arms race, so how will this affect our electrical energy?
Major technology companies (AWS, Microsoft, Google, etc.) are deeply concerned about electricity shortages that threaten their computing capabilities, which is their core business. For this reason, these countries have launched a fierce arms race designed to provide them with electrical reserves that will suffice them for the next 20 to 30 years and ensure their energy independence, just like other countries.
It’s a zero-sum game, and one kilowatt always comes at the expense of the other. In addition to the traditional energy they buy in large quantities, they are trying to control green energy reserves, primarily solar and wind energy.
For example, Amazon bought 50% of the energy production at the Moray West wind farm in Scotland. In 2022, technology companies purchased about 48% of the total green energy production in the United States, followed by the energy sector (9%), the telecommunications sector (8%), and the food and beverage sector (7%).
Tech giants are buying up alternative energy stocks not to protect the environment, but because the prices of these energies have fallen by dozens of percentages in recent years, and only these energies now have significant reserves available.
It is commendable that these technology companies are involved in building alternative energy projects themselves. However, their aggressive seizure of these electricity reserves raises concerns that they could dominate the electricity market in the future and harm the welfare and rights of consumers and businesses that do not have the purchasing power like theirs.
Regulators around the world have yet to address this potential under-the-radar threat, and they must do so soon, in order to ensure energy justice for all. Furthermore, clear priorities for electricity distribution must be set, taking into account ethical issues such as: who will set priorities and according to what criteria? For example, should there be a priority for TikTok or a diagnostic imaging center serving thousands of doctors and hundreds of thousands of patients?
For Israeli entrepreneurs, unlimited electricity consumption in the age of AI and artificial intelligence is an exceptional business opportunity. Traditional electricity infrastructure, which has not fundamentally changed for decades, is expected to undergo full digitalization in the coming years, and the entire sector will shift to the electricity cloud, a process similar to what the telecommunications industry has undergone. This is a call for entrepreneurs to enter this competitive field where innovative solutions will be needed in the areas of electricity production, transmission, supply, customer interfaces, including billing, collection, and more.
The government must remember that green energy is not only cheap and environmentally friendly, but will also ensure the energy independence of the high-tech industry and the entire economy that requires increasingly more processing power. Because without electricity, not a single piece will move from its place.
Yair Snir is Managing Partner at Dell Technologies Capital in Israel and Europe
