Soaring power demand from AI and crypto pose threat to grid

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President Joe Biden is delaying plans to approve what would be the country’s largest natural gas export terminal, as he faces mounting pressure from climate activists, according to a report in The New York Times yesterday.

The White House is now requiring the Department of Energy to conduct an environmental review of Calcasieu Pass 2, a $10bn project by Venture Global, before it can be approved. CP2 is one of 17 proposed natural gas export terminals in the US, and a delay could have ripple effects for other projects in the pipeline.

Venture Global slammed the Biden administration following the report, accusing the White House of “trying to force policymaking through leaks to the media”.

“This continues to create uncertainty about whether our allies can rely on US LNG for their energy security,” said Shaylyn Hynes, a Venture Global spokeswoman. “If this leaked report from anonymous White House sources is true, it appears the administration may be putting a moratorium on the entire US LNG industry.”

In an election year, the president is walking a tightrope on climate and energy security, launching ambitious climate rules while backpedalling on commitments to curb fossil fuel production. Last year, the US surpassed Australia to become the largest exporter of liquefied natural gas. 

Today’s newsletter looks at the vast amounts of electricity required to power our artificial intelligence, cryptomining, and internet use.

Thanks for reading.

— Amanda

The AI and crypto electricity boom

Our ever-expanding digital footprint is gobbling up so much power that it is prompting alarm from regulators and backlash from environmentalists. 

By 2026, global electricity demand from data centres could surpass 1,000 terawatt hours, more than double 2022 levels, according to a report from the International Energy Agency released yesterday. The power-hungry facilities consumed 460TWh of electricity in 2022, roughly 2 per cent of the world’s total — although the share is much larger in particular countries.

Data centres are the backbone to our digital lives, supporting everything from our photos on the cloud to patient data in hospitals. Their 24/7 operations and large cooling systems require vast amounts of power, and the recent boom in AI and cryptocurrency is helping drive the industry’s electricity consumption to unseen levels. ChatGPT, for example, uses nearly 10 times as much electricity than Google search, according to the IEA. 

The energy watchdog warned that “the rapid expansion of the data centre sector and the elevated electricity demand can pose challenges for the electricity system” and called for greater efficiency improvements and regulation. 

Jim Robb, chief executive of the North American Electric Reliability Corporation, a regulatory body, told the Financial Times that the explosion in data centres is “very, very real” and utilities are having difficulty keeping up. Together with the rollout of electric vehicles and industrial reshoring, data centre growth is putting some electricity networks in the US at “high risk” of outages, particularly during weather events.

The risks, however, won’t be felt evenly. Approximately 33 per cent of the world’s data centres are located in the United States, estimates the IEA. Another 16 per cent are in Europe. In Ireland, data centres will make up nearly one-third of the country’s electricity demand by 2026. 

“You couldn’t have a modern society without data centres, but it’s fair criticism that certain locations have taken more than their fair share,” said Rob Elder, chief commercial officer of Bulk Infrastructure, which builds data centres in Norway, an attractive destination for companies for its large amount of renewable energy.

The data centre boom is also concerning local residents and environmentalists around the world, who worry the buildout is harming the natural landscape and diverting renewable energy and water supplies from other uses.

“It’s not a cloud. It’s not some ethereal, funky thing in the sky. It’s these huge concrete boxes that require all this energy and are taking up our green space,” said Elena Schlossberg, co-ordinator for Coalition to Protect Prince William County, a group protesting data centre development in Northern Virginia, the largest data centre market in the US.

“We’re not Luddites . . . We don’t consider ourselves anti-data centres, we just want data centres done in the right way,” said Dylan Murphy, an activist at Not Here Not Anywhere, an Irish climate group.

Economic developers and industry members argue that data centres have taken massive strides to improve energy efficiency and have been early leaders in deploying renewables on to the grid. 

New EU rules this year require operators to report their energy use and emissions from data centres. The US, meanwhile, requires the federal government to study the industry’s energy and water use, and China wants data centres owned by public organisations to be powered entirely by renewable energy by 2032. 

“We’re not going to be able to decarbonise without digitalisation,” said Garry Connolly, founder of Host in Ireland, an industry group. “There’s no doubt that the challenges of Ireland’s association with data needs to be addressed and aligned as we create and build out the renewable resources that we have at our doorstep.”

Job moves

• Europe’s largest copper producer Aurubis has dismissed three of its top management, including chief executive Roland Harings, chief financial officer Rainer Verhoeven, and chief operating officer Heiko Arnold, following a fraud scandal.

• Ionic Rare Earths, a metals supplier, appointed Brett Lynch as executive chair. Lynch formerly served as managing director of Sayona Mining.

• Energy Recovery, an energy efficiency technology manufacturer, appointed David Moon as president and chief executive. Moon previously served as president of Carrier Commercial Refrigeration.

• Technip Energies, a French energy transition-focused firm, appointed Loïc Chapuis as chief operating officer and Marco Villa as chief business officer.

Power Points

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Energy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu and Tom Wilson with support from the FT’s global team of reporters. Reach us at energy.source@ft.com and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.