Necessity Is the Mother of Rational Thinking, Especially When It Comes to Energy, By THOMAS J SHEPSTONE
“The AI revolution, setting aside all the hype and ethical implications, is forcing rational thinking on a lot of people who previously indulged themselves on false utopian dreams of free perfectly…”
Necessity Is the Mother of Rational Thinking, Especially When It Comes to Energy
DEC 17, 2024
The AI revolution, setting aside all the hype and the ethical implications, is forcing rational thinking on a lot of people who previously indulged themselves on false utopian dreams of free perfectly clean energy sources. AI will demand many new massive data centers requiring cooling and huge amounts of electricity.
Once upon a time, Big Tech thought it could power its future with bird-swatting, turtle-frying boondoggles such as Ivanpah, financed in part by us, of course. They soon found out natural gas was essential to that project, though, as reality took a bite out of the green apple.
Then, AI compeition accelerated and Big Tech decided it might need nuclear if it was going to meet its humongous energy needs and still honor all its politically correct net zero pledges. That was a first step toward rational thinking as nuclear has great promise and will clearly be needed. It also has the davantage of allowing for fuel storage on-site.
Now, Big Tech is slowly being forced to take another step. It is facing another reality; that nuclear takes time to develop and it’s currently quite expensive. It will take years to streamline the regulations and get the costs under control. Moreover, locating near existing nuclear plants and simply buying their power was dealt a big blow when FERC said ‘whoa’ in the interest of protecting existing customers.
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That’s why we are now hearing about talks of putting new natural gas plants near data centers to supply the power needed. But, that will take time, too. Building anything new of the magnitude required takes years, and the demand for the electricity is right around the corner. Also, while natural gas is a great economic solution and, like nuclear, has to be part of the answer, it has its own downside. It is that natural gas doesn’t store well on-site to ensure continuous operation, which is a necessity.
It’s only a matter of time, therefore, that BIg Tech will have to face the ultimate reality; that there is one energy source that is inexpensive, reliable and allows for storage on-site that no one is much talking about and it is coal. Importantly, there are a large number of retired coal plants that could easily be reactivated if a Big Tech outfit wanted to locate near one.
Oh, yes, this would require all kinds of excuses, false promises of it only being a temporary solution, and other PR blather, but necessity is the mother of all rational thinking and we’re already seeing more positive talk about coal. Consider, for instance, the following from OilPrice.com (emphasis added):
The world’s consumption and exports of thermal coal are expected to rise this year from 2023 to hit fresh record-highs, according to export and power generation data cited by Reuters columnist Gavin Maguire.
Coal-fired electricity generation has increased so far this year by 2% compared to 2023, to hit new highs as power demand in emerging markets grows…
Moreover, global exports of thermal coal – the type used in coal power plants – have also climbed this year, due to rising demand in India and China in particular.
The world’s thermal coal exports rose by 9 million metric tons between January and November 2024 compared to the same period of last year, per vessel-tracking data by commodity analysts at Kpler…
Last year, coal demand grew by 2.6% to hit an all-time high, the International Energy Agency (IEA) said in a July overview of the coal markets. Back then, the agency expected coal demand for 2024 to remain broadly flat compared to 2023.
There is no mention of data centers or other sources of demand but it’s obvious that China and India will clearly accomodating a lot of them as well. And, the push to electrify everything else leads inexorably toward ewver larger power deamnds that are driving the revival of coal. Combine this with President-Elect Trump’s endorsement of clean coal in yesterday’s press conference and Big Tech suddenly embracing him and you can can see where things are headed; toward a coal, gas and nuclear energy foundation for growth and it will not be denied. Green energy will have little to do with it.