The White House has raised concerns about a potential surge in electricity prices driven by the increasing demand for artificial intelligence (AI) technology. A forthcoming report from the White House Council of Economic Advisors warns that without a significant boost in energy output, the energy needs of AI data centers could surpass the total consumption of various sectors involved in producing construction materials. The report highlights that by 2030, U.S. data centers may consume more electricity than the combined outputs of industries like aluminum, steel, cement, and chemicals. Moreover, the U.S. is at risk of losing ground to China in the energy race.
Currently, China produces about twice as much power as the United States and is heavily investing in nuclear energy. These investments have positioned China to become the largest nuclear power producer globally by 2030. The report indicates that if a significant portion of U.S. businesses adopts AI by 2034, it could boost annual labor productivity growth and consequently GDP growth. The report also specifies that the rising demand for AI and cloud computing is already impacting electricity consumption in the U.S. After two decades of minimal growth, electricity demand rose by two percent in 2024.
To meet this growing need, the Council estimates a required investment of around $1.4 trillion between 2025 and 2030. This investment is crucial for accommodating ongoing electrification and the reshoring of manufacturing. Failure to invest in energy infrastructure could lead to substantial price hikes, with projections indicating electricity costs may rise between 9% to 58% by 2030. Additionally, the fragmented nature of the U.S. electricity grid contributes to higher prices.
The report points out that improving grid connections could lower production costs and increase resiliency. It urges for enhanced access to energy resources, especially domestic uranium mining, critical for the country’s nuclear energy generation.
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