In a blog post on Wednesday, Cathie Wood-led ARK Invest has projected that the growth and profitability of AI data centers will remain strong, despite increasing power demand and costs.
What Happened: The blog written by Sam Korus, director of Research Autonomous Technology & Robotics at ARK Invest, indicates that AI companies could partially operate off-grid through independent power generation.
For example, Tesla and SpaceX CEO Elon Musk has used generators to power xAI’s data center in Memphis, Tennessee, bypassing full grid interconnection.
ARK estimates that the additional demand from AI data centers will drive the growth in global electricity demand to 3.2% at a compound annual rate through 2030.
This is despite the average growth in electricity production globally being around 2.7% annually for the past five years.
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ARK’s research also suggested that the time required to build new generation and distribution capacity will not be a limiting factor.
Electricity accounts for approximately 9% of total AI data center costs, leaving ample room for companies to invest in expedited, non-grid power solutions without disrupting data center economics.
The research suggested that the incremental capital required to meet the incremental electricity demand would be around $235 billion in 2030, roughly 6% of what ARK expects to be spent on AI hardware that year.
Why It Matters: The power demand for AI has been a topic of concern, with President-elect Donald Trump previously expressing shock at AI’s substantial electricity demands in a conversation with Musk.
Earlier, the CEO of Oklo Inc., Jacob DeWitte, also highlighted the “mind-blowing” demand for AI power, noting that Alphabet Inc.—Google’s parent company—partnering with Kairos Power is just the beginning for nuclear power startups eager to collaborate with major tech firms.
In April 2024, it was reported that if energy efficiency does not improve, AI data centers could account for up to a quarter of U.S. power demand by the decade’s end.
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