Energy capacity will cap the AI buildout

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 43:04

   Yeah, yeah. So where does innovation come in and where does like its pure execution? Well, you know, and if we start at, you know, first principles here, you know, our nation has done a terrible job with its energy capacity, right? You know, and essentially we went through 10 to 15 years where essentially I was taking coal offline at the rate I was adding renewables, and essentially the nation was flatlined in terms of overall energy capacity.

2. 43:33

   Not good. Because in an AI digital age, energy capacity equals economic capacity. So essentially my economic capacity as a nation, flat for 15 years if you buy that thesis, which I think is very provable. Over the last five years, we've seen this enormous influx and to just give me more capacity. But, you know, I think, you know, even with that, we've gone to maybe increasing our national energy capacity 4% per year.

3. 44:04

   Something like that. Going from, you know, essentially zero to one, right? Wow, 4X, right? Or, hmm, 4%, right? So to me, you know, that, you know, it's a bad situation. So we just need more energy capacity for it. So number one, and obviously we have some companies in that space, you know, We talked about nuclear operating as one of those with Alva. And, you know, I think nuclear, right, you know, as a baseload is, you know, a fabulous thing that we want to go build more of.

4. 44:35

   You know, unfortunately, all of our renewables have, you know, deep dependencies in China, which is very unfortunate, you know, for us. You know, gas turbine lead times are only eight years at this point, right? So, you know, I mean, we really have a difficult environment to scale up rapidly, but one, we just need more capacity. And fundamentally, energy capacity somewhat dampens how euphoric we can get on AI, right?

5. 45:02

   Because, you know, why build a new data center and buy, you know, the million GPUs if I can't power them, right? And I think you're going to see more and more defaults happening on many of those data center projects because the energy won't be there. So you think it'll be a significant headwind? I think it will be a headwind. And I think you're already starting to see some of the first indicators of that, the Oracle, you know, comment.

6. 45:25

   And I think that's the first of what you're going to see many. Now, it's not like we're going to slow down as a result, but I think people will start saying, do I really have the energy, you know, to underwrite the capital commitments that I'm making, you know, for, you know, cement, for data center racks and GPU purchases? So I do think it's, you know, going to be, you know, an upper bound. But we need more energy capacity and we need to get more innovation into that and we need more of those supply chains in the U.S.

7. 45:55

   Nuclear, one of my favorites. When was the last nuclear reactor that came online in the U.S.? It was 20 years ago. We just stopped a very capable industry.