Data Centers and AI Operations Record Power Demand and Prices

Electricity Price It has skyrocketed over the past year, with increased demand and increased investment in aging grid infrastructure almost doubled overall inflation.

Prices rose 4.5% per year in May, according to the Bureau of Labor Statistics.” Consumer Price Index A wide range of measures of the cost of everyday items such as (CPI), gasoline, groceries, rent, and more. The overall inflation rate for all products and services in May was 2.4%.

Power demand is reaching record highs, according to Phil Flynn, a senior energy analyst at Price Futures Group and a contributor to Fox Business.

The first major heat wave of the season brought some of the hottest temperatures seen in northeastern cities on Monday, even before air conditioning use spikes and electricity demand surged further. Despite improving air conditioning efficiency, Flynn said, “The overall impact on electricity usage remains a major and significant, but is necessary for health benefits.”

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Dangerously hot The New York National Weather Service office is also expected to warn on Monday that heat index values ​​of up to 110 degrees are expected in parts of southern Connecticut, northeastern New Jersey and southeastern New York.

Chicago’s National Weather Service office was posted on X on Tuesday, with the area likely to continue to have a thermal index above 100 degrees.

The rapid rise in electricity demand is also driven by the data centers needed to train, deploy and implement artificial intelligence models, according to Flynn and Rob Thummmel, senior portfolio managers at Tortoise Capital.

Thummel told Fox Business that data centers have the large computing power to perform the tasks they need AI Applications It works, but it relies on energy infrastructure to generate, transmit and distribute power.

According to Thummmel, the rise in investments that are contributing to increased power demand due to increased computing power from hyperscalers building larger data centers after decades of stagnant electricity demand.

Flynn said the data center’s electricity consumption has tripled to 176 terawatt hours over the past decade, and could again double or triple within three years.

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The International Energy Agency predicts that the US economy will consume more electricity in 2030 than it would be manufactured by combining all energy-intensive products, including aluminum, steel, cement and chemicals, for the most part for the use of artificial intelligence.

Another factor that raises consumer costs is capital investment in electricity infrastructure. Energy Information Management (EIA).

These investments more than doubled between 2003 and 2023 due to a combination of factors including replacement and upgrade of aging and delivery infrastructure to resist fire and storm damage, and utilities to install first natural gas-fired power generation, wind and solar power generation and battery storage. New lines have been connected to renewable resources, and new technologies such as smart meters, sensors and automatic control have been added to the system, adding costs.

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The problem is that current demand exceeds the country’s supply capacity. This is “advancing the problems of our aging infrastructure and power generation methods.”

“The US power grid needs investments to maintain reliability and modernize to anticipate and expand higher demand,” Thummel said, “helps increasing use of lower cost, higher efficiency natural gas, making it easier to manage increased costs for consumers.”

But fixing the grid “will be the biggest challenge for the economy going forward,” Flynn said.

“We need to increase our power capabilities so that we can become leaders in technology driving the future economy, such as artificial intelligence data centers,” he said.