Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Register

31 March 2025

Home / White Papers 2024

AI and Electricity Demand: The Very Hungry Caterpillar

AI is a transformative technology with rapidly growing compute requirements that will significantly impact electricity demand well into the 2030s. This surge in demand, coupled with the increasing use of electric vehicles and the onshoring of manufacturing, will strain energy infrastructure, which has remained static from 2007 to 2022.

AI models’ immense need for electricity is evident from the 58% increase in demand by tech giants like Microsoft, Google, Amazon, and Meta between 2020 and 2022, primarily due to data center expansions. As data centers are major electricity consumers, their demand is expected to triple in the next decade, stressing generation capacity, transformers, and the T&D grid.

Without substantial investment and innovations in battery storage, small modular reactors, and efficient semiconductors, the electricity supply may lag behind demand, hindering AI progress and affecting innovation, productivity, national security, and equity markets.

This paper explores these challenges and their implications for energy infrastructure and investment.

Download the full paper

3 Comments
Dr David Arelette
August 19, 2024

In every gold rush there is somewhere an immutable Rate Determining Step - chemical reactions have one step which runs at a set rate, perhaps one molecule's outer electrons are more tightly packed at a lower energy level such that no matter how much core energy (heat and light) applied, the rate will not change. Same here, sun energy is limited by the sun's fusion rate and the side show effects of solar wind. Any time you see a Log graph start to worry, the 10 times every increment soon gets to a Trillion times and in scientific language, you are stuffed.

Cam
August 15, 2024

Did anyone say nuclear?
Our current plan seems to be to convert large chunks of farmland into solar farms. Of course we still need food, so somewhere trees will be cut down to open up new farmland, maybe here or maybe we'll export the jobs, deforestation and income overseas and get food from there.
If you've not seen a solar farm, head out of your capital city and have a look. Its thought provoking seeing these on good arable land. The local communities will value you visiting and there's a surprising number of quality tourist attracts to experience.

Mark
August 18, 2024

Cam… Nuclear power stations generate about 1Gw. Coal fired are around 2.5Gw. Apart from the massive costs and delays to built nuclear you are still going to have less than half the output. It’s just another spin on the old “climate change denier” rhetoric. Let’s just get on with it please!

 

Leave a Comment:
Firstlinks is sponsored by:
banner

Most viewed in recent weeks

16 ASX stocks to buy and hold forever, updated

This time last year, I highlighted 16 ASX stocks that investors could own indefinitely. One year on, I look at whether there should be any changes to the list of stocks as well as which companies are worth buying now. 

UniSuper’s boss flags a potential correction ahead

The CIO of Australia’s fourth largest super fund by assets, John Pearce, suggests the odds favour a flat year for markets, with the possibility of a correction of 10% or more. However, he’ll use any dip as a buying opportunity.

2025-26 super thresholds – key changes and implications

The ABS recently released figures which are used to determine key superannuation rates and thresholds that will apply from 1 July 2025. This outlines the rates and thresholds that are changing and those that aren’t.  

Is Gen X ready for retirement?

With the arrival of the new year, the first members of ‘Generation X’ turned 60, marking the start of the MTV generation’s collective journey towards retirement. Are Gen Xers and our retirement system ready for the transition?

Why the $5.4 trillion wealth transfer is a generational tragedy

The intergenerational wealth transfer, largely driven by a housing boom, exacerbates economic inequality, stifles productivity, and impedes social mobility. Solutions lie in addressing the housing problem, not taxing wealth.

What Warren Buffett isn’t saying speaks volumes

Warren Buffett's annual shareholder letter has been fixture for avid investors for decades. In his latest letter, Buffett is reticent on many key topics, but his actions rather than words are sending clear signals to investors.

Latest Updates

Investing

Designing a life, with money to spare

Are you living your life by default or by design? It strikes me that many people are doing the former and living according to others’ expectations of them, leading to poor choices including with their finances.

Investment strategies

A closer look at defensive assets for turbulent times

After the recent market slump, it's a good time to brush up on the defensive asset classes – what they are, why hold them, and how they can both deliver on your goals and increase the reliability of your desired outcomes.

Financial planning

Are lifetime income streams the answer or just the easy way out?

Lately, there's been a push by Government for lifetime income streams as a solution to retirement income challenges. We run the numbers on these products to see whether they deliver on what they promise.

Shares

Is it time to buy the Big Four banks?

The stellar run of the major ASX banks last year left many investors scratching their heads. After a recent share price pullback, has value emerged in these banks, or is it best to steer clear of them?

Investment strategies

The useful role that subordinated debt can play in your portfolio

If you’re struggling to replace the hybrid exposure in your portfolio, you’re not alone. Subordinated debt is an option, and here is a guide on what it is and how it can fit into your investment mix.

Shares

Europe is back and small caps there offer significant opportunities

Trump’s moves on tariffs, defence, and Ukraine, have awoken European Governments after a decade of lethargy. European small cap manager, Alantra Asset Management, says it could herald a new era for the continent.

Shares

Lessons from the rise and fall of founder-led companies

Founder-led companies often attract investors due to leaders' personal stakes and long-term vision. But founder presence alone does not guarantee success, and the challenge is to identify which ones will succeed in the long term.

Sponsors

Alliances

Site Map

About Firstlinks

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.