Watts Up? The Challenges and Opportunities of Powering AI | EP158

Art of Boring

In this episode, we explore the growing electricity demands of data centers stemming from artificial intelligence (AI) with Chris Silvestre, Analyst on the U.S. Equity Team. He shares insights from a recent research trip visiting data centers in Northern Virginia—the data center capital of the world—and discusses challenges around meeting demands given constraints of land availability, energy generation and transmission, and the significantly increased power demands required to develop large language models.

Key points from this episode:

• Electricity demand in the U.S. has been relatively flat for a decade but is expected to increase 25% by 2050 due to electrification, ESG goals, and data center expansion to meet AI demand.

• For the same footprint and the same data center, you need 10 times more power for AI workloads than you did for the old-style data centers.

• Data centers cluster organically in hubs, such as Northern Virginia, to minimize data transfer costs, but this clustering strains power infrastructure.

• Meeting increased data center capacity demands faces land and energy constraints. While the U.S. has the ability to generate power, it may not have it in the right spots at the right time to support this new incremental demand.

• Businesses are proactively responding to increased demand by signing deals to secure data center capacity despite constraints, while governments are implementing policies and reforms to support AI development.

• With respect to AI or high-performance computing, there is a sense that this is a priority and will be a matter of national interest if not national security.

Host: Andrew Johnson, CFA, Institutional Portfolio Manager

Guest: Chris Silvestre, CPA, CFA, Equity Analyst

For more details and full transcript visit: https://www.mawer.com/the-art-of-boring/podcast/watts-up-the-challenges-and-opportunities-of-powering-ai-ep158

This episode is available for download anywhere you get your podcasts.

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