AI and Affordability Dominate First Day of BloombergNEF Energy Summit
(Bloomberg) -- After two decades of flat electric demand, artificial intelligence has emerged as the US power industry’s great hope. More recently, it's become clear AI is also its biggest threat.
It’s no wonder, then, that AI, data centers and their impact on the utility bills of homes and businesses dominated conversation Monday at BloombergNEF’s annual summit in San Francisco.
Already, the data center boom has shaped the US economy. In November, it swayed elections in New Jersey, Virginia and Georgia. It's now poised to play a key role in the congressional midterms this fall.
Here are five takeaways from the first day of the BNEF summit.
Affordability is an 800-pound gorilla
With concerns about energy affordability mounting, data centers are under increasing pressure to limit the burden on individuals. Otherwise, “consumers may end up holding the bag,” said RMI co-founder and chairman emeritus Amory Lovins.
Data centers are the main driver of utility cost growth, so “they also need to be the ones to cover that,” said Ryan Wiser, senior scientist, Lawrence Berkeley National Laboratory.
Efforts are being made to address this. Just this month, President Donald Trump and a group of governors in the Northeast and Mid-Atlantic agreed to push for an emergency wholesale electricity auction that would effectively compel tech companies to fund new power plants. The plan is intended to address two challenges: getting data centers the power they need while attempting to tame utility bills.
Nuclear may miss the initial AI moment
Tech companies have been unequivocal: They want nuclear energy, which is clean and can provide round-the-clock power. Meta Platforms Inc. struck major deals with startups and Microsoft Corp. has led the charge to restart a shuttered power plant, to name two recent moves to kickstart the nuclear industry.
Yet not a single new small modular reactor, or SMR, has been built in the US, and only one design has been approved by the US Nuclear Regulatory Commission. And a traditional nuclear power plant takes about a decade to stand up, far longer than the timeframe required to meet burgeoning AI demand.
The longstanding question for nuclear power is whether or not reactors can “be built on time, on budget and actually be competitive with natural gas,” said BNEF analyst Musfika Mishi.
Today, nuclear energy in the US is three times more expensive than natural gas-fired power, Mishi said. While SMR companies have promised lower costs, she said, time will tell if they can succeed.
Is AI demand overhyped?
There’s an even more fundamental question than what energy technologies are best-positioned to meet demand: Just how much demand will there be? PJM Interconnection, operator of the biggest US grid, recently dialed back its electricity use forecast for the summer of 2027 after taking a closer look at data center connection requests. But on the whole, US data center demand is set to grow.
BNEF estimates it will hit around 400 terawatt-hours by 2030, en route to tripling over the next 10 years. Other forecasts project much more, with some ranging above 1,000 terawatt-hours of demand by the end of the decade.
Lovins said investors should consider a number of risks when deciding how much to bet on a rapid buildout of natural-gas power plants to meet projected AI demand. Those include the possibility that data centers become more efficient and flexible in their energy use or that the AI bubble pops.
“Demand uncertainty and financial risk rise deeply when artificial intelligence meets natural stupidity,” said Lovins.
United States of contradictions
On the one hand, Trump has made it harder to build wind power. On the other, he’s pushed for a data center boom that needs all the energy it can get.
That’s just one of the many contradictions at play in US energy policy under Trump. The country has also backed out of many climate pacts and groups, allowing China to build even further on its massive clean tech lead, creating what former Energy Secretary Jennifer Granholm said was a major problem.
“Our economic competitors like China are so happy that the US has pulled back,” she added.
Democrats should “break some eggs”
Granholm’s advice to the next Democrat to win the White House? “Don’t be afraid to break some eggs.”
Under President Joe Biden, Granholm oversaw an effort to allocate tens of billions of dollars in loans and grants for clean technologies, such as hydrogen and carbon removal. Some of that funding has since been clawed back or wiped out by the Trump administration. Granholm said that his aggressive approach should inspire how Democrats tackle the clean energy buildout.
“The cancellation of all of these loans and grants was stunning to a lot of people who had worked on those because we thought we had commitments, we had obligations,” Granholm said. “Had we known that there would be such a slash-and-burn mentality about it, I think we would've done things differently.”
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