7 Predictions
Basing my predictions on the implications of our great need for more electric power
“For in him all things were created: things in heaven and on earth, visible and invisible” Colossians 1:16a - I’ve always been fascinated by that verse - a clear evidence of the inspiration of the bible - otherwise, how to explain the awareness of the “invisible” things two thousand years ago?
Electricity is one of those invisible things, and that brings me to today’s topic.
First, my premise, then the predictions, then the summary
Note - after doing the audio, I realized it would be good to include a short summary of the 7 predictions, and added that at the end. Scroll down to see it, because it’s not in the audio version.
One thing leads to another. Based on that, I can make a few predictions. It will be fun to see in 5 or 10 years whether I was right or not. If I am, I’ll be sure to remind everyone. If I’m wrong, uh - I don’t think I’ll bring it up.
I see something like a chain reaction starting with the recent exponential increase in demand for energy.
AI, or Artificial Intelligence, is the big driver, but I’ll use a more explanatory term and call it the computerization of just about everything.
I always thought my computer’s use of energy was insignificant. It hardly raised my electric bill at all. But it does take energy, and computers have gotten more powerful, increasing the amount of electricity needed to run them.
from fierce electronics - “Nvidia’s newest megachip, Blackwell, … has 200 billion transistors and promises enough processing power to handle the largest AI models when thousands of these GPUs are ganged together in a mega data center. But… One version of a single Blackwell chip for data center use draws 1,200 watts of electricity, an insane amount of power compared to just a few years ago.” (shortened where I put 3 dots, and emphasis added)
“…the generative-AI boom starting around 2023, when tools like OpenAI’s ChatGPT and image-generation apps like Midjourney came along. Amazon CEO Andy Jassy said the AI computing business is growing at a faster rate than AWS*.”
“Our AI business is a multibillion-dollar business; it’s growing triple-digit percentages year over year and is growing 3x faster at its stage of evolution than AWS did itself,” Jassy said in the Q3 earnings call.”
* (I looked up “AWS” to get a better understanding. Amazon Web Services - a comprehensive, evolving cloud computing platform. Here’s Amazon’s own description: ‘AWS has significantly more services, and more features within those services, than any other cloud provider–from infrastructure technologies like compute, storage, and databases–to emerging technologies, such as machine learning and artificial intelligence, data lakes and analytics, and Internet of Things.’)
Artificial Intelligence has been around for a while. Alexa came out in 2014.
Every little thing that is digitally uploaded to the “cloud” has to be held in ‘storage’ by large banks of computers called “servers”. Every digital photo that is saved to the cloud. Every video. Every conversation and comment on social media. Every document. Every signal from cell phones and ‘smart’ appliances. Tax records. Health records. On and on.
The reason the internet is called a ‘net’ is because all those computers have to be able to ‘talk’ to each other. All that information, or data, that is sent to the ‘cloud’ has to be accessible. Some is public and accessible by everyone; some is private, like health, bank, and insurance records and are securely coded for limited, authorized access.
As you can imagine, the amount of data in the cloud is growing astronomically every day. With the mind-boggling amount of information in those servers, a huge amount of computing power has to be able to ‘search’ for the particular piece of information that you’re looking for, and it has to be found quickly. In fact, we’ve come to expect an answer to our search within seconds.
Data centers require electric energy, and tons of it, and they need it to be steady, 24 hours a day, every day. And the demand will just keep going up.
I’m not even considering the extra demand required for “electrifying everything”, because that’s a ridiculous goal. For example, natural gas is so much cheaper than electricity that it’s incomprehensible why anyone would want to heat their home with electricity. And if all vehicles were electric, the demand for more electric power generation would go sky high. That’s not going to happen, because most of us are going to keep our old reliable internal combustion vehicles.
Unlike EVs, which have been hyped and mandated to the breaking point of the narrative, AI and its awesome thirst for electric power is not going away.
There are only a couple ways to provide the kind and amount of energy we need in a reliable and steady stream. We need power generating plants from fossil fuels and nuclear reactors. Wind and solar won’t cut it. They aren’t energy dense or efficient and obviously not steady or reliable.
The war on CO2 emissions is an extreme policy, and terribly misguided, but it has so much political momentum that it will take several years of widespread recognition as a failure before it can be brought to a stop.
In the meantime, look at the implications of this increasing demand for electricity.
Building new power plants doesn’t happen overnight. Because of the great need, the over-regulation of the siting and permitting process will be reduced to a more sensible level, but still, it takes at least a couple years to build a natural gas fired power plant, and it would take 5 years for a full size nuclear plant even if the present regulatory stumbling blocks were cut in half. In the meantime, there will be lots of blackouts on the power grid.
Metallurgical coal will never be phased out because it’s used for coking in steel-making.
Since thermal coal releases about twice as much CO2 as natural gas, new gas plants will continue to be built, at an even faster pace.
Oil is used in the manufacture of thousands of products that we’ve come to rely on, so we will always need lots of oil. And oil wells produce lots of natural gas as a byproduct.
By the way, the number 7 is a biblical number that seems to be associated with completeness, starting with the 7 days in the week (where did that come from? Not a solar or lunar calendar) - our week came from the 7 days of creation. At the other end of the bible, we have the 7 seals, 7 trumpets, etc. The number 6 or 8 just doesn’t have the same feel to it - so here goes…
prediction #1
Coal, oil, and gas will still be in great demand for many years to come, despite all efforts by environmentalists to kill them.
prediction #2
Nuclear power plants are making a comeback, and this will keep on gaining momentum.
prediction #3
We will need more uranium. Here’s where that chain reaction comes in. Since nuclear power plants will be increasingly built, we will need more nuclear engineers and workers skilled in building, operating, and maintaining nuclear power plants.
prediction #4
SMRs will be approved and built. This is another part of #3. There is a great demand for small modular nuclear reactors (SMRs), but no one company has emerged with an affordable or scalable product yet. It’s in the beginning stages. Globally, there are about 70 companies trying to come up with the best design and get approvals and permits. There will be a huge shakeout, and it’s just too soon to predict who the winners will be. I do like Rolls Royce and BWX Tech, because of their previous experience with nuclear powered submarines. I’m trying to find out if BWXT is getting into SMRs. Also, I’m looking at X-Energy because Amazon has already invested in them.
I will predict that SMRs will soon be a great source of power for special situations where a full scale power plant is not needed. The most obvious application is for data centers or for any industry that needs a lot of juice but is miles from the existing infrastructure.
prediction #5
We will build more desalination plants. I think we’re heading for problems with water supply. Data centers use a lot of water for cooling, and nuclear power plants use a lot of water too. And so does fracking. But we can’t endanger the water table needed by farmers.
So I’ll predict that before too long, we’ll need to be building desalination plants to get good water out of salt water.
Desalination requires a lot of energy. The salt water has to be boiled long enough to convert it all to steam. When it’s condensed back to liquid, the salt has been left behind. It’s like a distillery. I’m coming around full circle here, because desalination might be a perfect application for SMRs.
prediction #6
Inflation will continue. This is another part of the chain reaction from the great need for energy. Energy underlies everything we do. Energy is becoming more expensive because of the misallocation of investments in the wrong kind of energy production. Wind, solar, and battery backup are the most inefficient ways to produce energy, and therefore the most wasteful of capital. If that same amount of capital were spent on nuclear power development, we’d be way ahead of the game. When energy becomes more expensive, it affects just about everything else. The price increases caused by the increasing price of energy are on top of the inflation continually caused by government spending and money-printing - which also is getting worse.
prediction #7
As inflation continues, Commodities will become more valuable. Gold and silver have industrial uses, but they also are attractive for protection against inflation. Commodities go up and down in the short run, but they hold their value in the long run - which cannot be said for any paper money from any country. When a nation collapses, their paper money goes to zero.
Again, coming full circle, another predictable reaction in the chain because of the increasing need for energy, our starting premise, is that copper will be very valuable. Basically, every electrical system uses copper because it’s a great conductor but a lot cheaper than gold or silver. The windings in every electric motor and generator are copper wire. The connections between terminals are made with copper wire. Electric transmission lines are copper. High voltage bus bars are copper.
Summarized - the 7 predictions
Coal, oil, and gas will still be in great demand for many years to come.
Nuclear power plants will keep on gaining momentum.
We will need more uranium and more nuclear engineers and skilled workers.
SMRs will soon be a great source of power for special situations.
Before too long, we’ll need to be building more desalination plants.
Inflation will continue.
Commodities will become more valuable.
Well, that’s about as far as I want to stick my neck out, so I’ll stop with these 7 predictions.
I concur.