The New Boom in Electrical Demand

 

“If it weren’t for electricity, we’d all be watching TV by candlelight.”

 

I am not sure who the clever wag was that said this, but it points out how we take electrical power for granted.

The history of electric power goes a s far back as 600 BC when the ancient Greeks noticed the electrical phenomena resulting from rubbing fur against amber which caused static. The word electricity comes from the Greek word for amber, “Elektron.”

Centuries later Ben Franklin performed his kite experiment demonstrating the electrical nature of lightning and the concepts of positive and negative charges. Then Edison created the first practical use for electricity with his incandescent light bulb and Nicola Tesla advanced Alternating Current. The 20^th Century saw the electrification of the world with implementation of the global power grid. Electric appliances and later the development of computers has revolutionized industries as well as our daily lives.

Today the increase in digitalization and the rapid developments in artificial intelligence have significantly boosted the need for data centres as well as their thirst for power. Electrical demand for data centres is projected to grow 2.5 times by the end of this decade alone.

Producing all this power creates a significant challenge for the existing electrical infrastructure. How can we produce the electricity we need while minimizing the harm to our planet? The answer will have to be a combination of power sources which includes natural gas, nuclear and renewables such as wind and solar.

There is a symbiotic growth relationship among natural gas, data centres and artificial intelligence. Data centres are almost indifferent to the cost of power since uptime is critical. Most are equipped with a back up energy storage system.

Big Tech is exploring all options as we saw with the recent agreement between Microsoft and Nuclear Power producer Constellation Energy. Nuclear power is very polarizing but cannot be ignored as another arrow in the power quiver. It offers clean, dependable, stable power.

Another area of increasing demand is in skilled labour. We will need not only more electrical power trades but semi-conductor manufacturing and battery giga factory workers.

Investors can find growth and income opportunities because of this new boom. More conservative investors might consider current income and longer-term growth with Utilities that develop infrastructure for power transmission and distribution. Growth-oriented investors might consider the whole variety of energy solutions.

Furthermore, growth is expected in suppliers to Data Centres who develop technology which can increase data transmission speed and storage capacity while reducing power consumption and heat.

The electrification of all our work and home lives has been evolving for centuries. It shows no sign of fading now and in fact is about to explode.