The Next Crisis Won't Be Oil It Will Be Electricity

[00:00:00]You know, there's a battle that's coming to America that um I think people have some idea of but they don't quite realize the extent of it. Um and this battle is already begun.

[00:00:14]This isn't a battle between, you know, uh Democrats and Republicans.

[00:00:20]Um and it's not a battle between AI and and human workers.

[00:00:28]It's going to be a battle over electricity.

[00:00:31]Specifically, who gets it?

[00:00:34]And who gets pushed aside when there's not enough to go around.

[00:00:40]Because that's what we're facing.

[00:00:42]On one side, you're going to have the wealthiest corporations in human history racing to build hyperscale artificial intelligence data centers.

[00:00:56]And on the other side working people, Americans, trying to keep their home cool, trying to operate, you know, a small business, or manufacture products, and paying electric bill that they already largely can't afford.

[00:01:24]You know, data centers once looked like ordinary warehouses filled with computer servers. And we've had data centers for a long time.

[00:01:33]A long time. We've had a lot of data centers for a long time and nobody paid much mind to them. Most people didn't even know they existed.

[00:01:44]They were much smaller.

[00:01:46]They didn't use um a ton of power.

[00:01:53]They didn't use a ton of water.

[00:01:57]Uh nothing by today's standards.

[00:02:02]They look like warehouses with computer servers in them.

[00:02:06]The new generation of data center is entirely different.

[00:02:12]Some of these proposed campuses require more than a gigawatt of continuous electricity.

[00:02:20]That is the output of a nuclear reactor, a large nuclear reactor, being consumed around the clock by one customer.

[00:02:36]Our uh data center electricity demand has already tripled over the past decade and the Department of Energy projects that it is likely to triple again by 2028.

[00:02:58]That's 18 months.

[00:03:05]By the end of 2028, data centers could consume 12% of all of the electricity generated in the United States.

[00:03:18]Just think about that.

[00:03:21]One industry a short 18 months from now will likely consume more than one out of every 10 electrons produced in America.

[00:03:38]And unlike a factory or a hospital or a a neighborhood, these facilities do not gradually increase their demand.

[00:03:50]A single project can arrive and request hundreds or even thousands of megawatts immediately.

[00:04:03]Our grid was not designed for this.

[00:04:11]For decades, >> [snorts] >> American electricity demand was flat.

[00:04:18]I've talked about this before.

[00:04:20]Utilities were planned very slowly.

[00:04:23]Power plants took years to to permit and construct. Transmission lines took sometimes a decade. Now, AI companies are arriving with plans to build massive campuses in two or three years, and they expect the grid to be ready when they arrive.

[00:04:42]Um but it's not going to be.

[00:04:45]That's the thing.

[00:04:47]It isn't.

[00:04:50]And the consequences are already visible, as you've heard me talk about PJM before, the country's largest regional power grid, serving just under 70 million people across 13 states in Washington, D.C.

[00:05:04]PJM's independent market monitor concluded that existing and forecast data center demand added 7.3 billion dollars to a single one of their capacity auctions, accounting for 82% of the auction's increased cost.

[00:05:26]Across two auctions, data centers were associated with nearly 17 billion dollars in capacity market revenue, about half of the [snorts] total.

[00:05:39]Capacity prices in PJM rose from just under $29 per megawatt day for 2024 to uh what, 320 9-ish dollars per megawatt day for year 26 and 27. That's an increase of like 1,000%.

[00:06:09]From 2024 it's on a 2-year cycle. So, from 24 to 25 and then from 26 to 27.

[00:06:18]1,000%.

[00:06:21]Now, capacity is not the electricity you directly consume. It's what um customers pay power plants simply to remain available when they need them.

[00:06:36]And ultimately, those costs work their way to your electric bill.

[00:06:45]This summer, PJM repeated tightening conditions as very high temperatures push demand to record levels.

[00:06:57]Congestion, a lot of congestion.

[00:07:00]Northern Virginia's the worst.

[00:07:02]Um of course, it has the largest concentration of data centers in the world.

[00:07:07]That helped drive wholesale electricity prices from about $30 to $300 in a matter of hours.

[00:07:19]And we entered this summer with PJM um about 7 gigawatts below its margin that it needs.

[00:07:29]And that's the conflict. That's That's what this is really about. When electricity becomes scarce, a power grid cannot distinguish between the server training an AI model or the air conditioner, you know, cooling an elderly person's home.

[00:07:49]It can't distinguish between that. It only knows demand.

[00:07:54]And um demand is exceeding available supply.

[00:08:02]The data center companies will argue and argue that they create construction work and expand the local tax base and attract investment and help America compete with China in artificial intelligence and they are right.

[00:08:21]They are.

[00:08:24]We can't just surrender, unfortunately, the AI race.

[00:08:29]It's going to influence medicine, finance, military intelligence, productivity, national security, you name it.

[00:08:44]But winning this race can't mean forcing American families to subsidize it.

[00:08:49]That's not a thing.

[00:08:51]If Amazon and Microsoft and and Google and and meta or any other trillion-dollar corporation needs the output of a nuclear reactor to power a data center, ordinary customers shouldn't have to pay for that. They shouldn't have to finance that.

[00:09:14]They shouldn't have to pay for the power plant and the transmission lines and substations and backup capacity, all the things that are required to serve it.

[00:09:26]The companies creating the demand must pay the cost.

[00:09:33]But the uncomfortable part of the story communities are frequently offered enormous investment figures and promises of new jobs.

[00:09:46]But what do you think happens when construction ends?

[00:09:51]A multi-billion dollar data center may only employ a couple hundred permanent workers.

[00:09:58]Meanwhile, the community is left with unbelievably high electricity demand a ton of noise and pollution you know, backup generators in some locations uh more strain on their water systems.

[00:10:17]The fight is happening and it's becoming more impossible to ignore.

[00:10:25]The corporations are going to win.

[00:10:27]They always do.

[00:10:29]And they always will.

[00:10:35]That's just the reality of what's coming. Nearly 200 utilities and data center developers recently signed a pledge intended to prevent AI-driven demand from increasing household electricity bills.

[00:10:52]It's a few years late.

[00:10:55]It's already happened. What are you talking about?

[00:10:59]This agreement calls for uh separate rate structures and requires developers to cover the infrastructure needed to serve them.

[00:11:10]But electricity rates are controlled by states and and a voluntary promise is not the same as an enforceable protection for customers.

[00:11:24]I'm not you know, Democrats, Republicans both are starting to ask kind of the same question.

[00:11:33]Why should a retired couple living paycheck to paycheck pay more so the richest technology company in the world can receive priority access to the grid?

[00:11:49]They shouldn't. So, what's the solution?

[00:11:53]It's pretty simple.

[00:11:56]Every data center must bring its own power generation.

[00:12:00]Period.

[00:12:02]That's it. Period.

[00:12:05]Nothing more, nothing less. You bring your power with you.

[00:12:10]It must be required.

[00:12:14]If if you need uh access, more transmission or substations, you pay for that.

[00:12:23]You pay for it.

[00:12:24]Period.

[00:12:27]At some point we have to do something that protect customers, people, citizens in this country.

[00:12:39]That's it. It's You know, it's not that difficult.

[00:12:44]Artificial intelligence can become one of the greatest you know, productivity tools ever created is what they say.

[00:12:51]But look, it's not powered by magic.

[00:12:56]It's powered by natural gas, nuclear, coal, wind, solar, batteries, transmission lines, transformers.

[00:13:07]And all of that at this scale requires an unbelievably enormous amount of capital.

[00:13:17]So, the question isn't whether America should build data centers. Of course, it should.

[00:13:26]The question is going to be who pays for it.

[00:13:35]And it's not going to be us.

[00:13:37]Or is it?

[00:13:44]Can the AI revolution, you know, build a stronger electrical system for everyone?

[00:13:50]Or will it just eat everything?

[00:13:54]Consume the system that we already pay for.

[00:13:58]Because when a trillion-dollar corporation and a struggling family are competing for the same electricity, unfortunately in this country, it's usually going to be the family that gets stiffed. That's how it works.

[00:14:19]Folks, if you haven't had a chance, there's a great episode of the American Power Podcast dropped today.

[00:14:27]Former NATO Ambassador Julie Smith, NATO Ambassador, Director of NATO Policy at the at the Pentagon for Barack Obama, National Security Advisor for Joe Biden. This woman is brilliant.

[00:14:42]She was our guest on the American Power Podcast. That's out. Just dropped today.

[00:14:49]I've never learned so much in my life spending an hour with a person as I spent with Julie Smith.

[00:14:55]I can promise you this pod this download this podcast download is a treat.

[00:15:03]And if you really want to understand NATO, and you really want to understand how it works, I highly suggest you check that out.

[00:15:11]Uh just a fantastic woman, fantastic individual.

[00:15:15]Um taught me so much.

[00:15:19]I could not thank her enough for what she taught me.

[00:15:23]You can check that out, the American Power Podcast on Apple, Spotify, anywhere you can download your podcast.

[00:15:32]You can also see it on the Find Out Media YouTube page.

[00:15:40]I'm telling you it's a great episode.

[00:15:42]I have more great ones coming.

[00:15:44]Uh please leave your thoughts, comments, questions in the comment section below.

[00:15:50]Thank you guys so much for all your support.

[00:15:52]Uh I will be back later today with an update on of course, Iran.

[00:16:01]You guys have a great day. Thanks.