OPINION
As Technology Advances, So Will Demand for Energy
Today’s economy is characterized for being increasingly reliant on digital tools and technology. The good news is that there are no signs that the trend is going to reverse anytime soon.
The next wave of tech products has the possibility to digitize even more parts of day-to-day life. From artificial intelligence (AI), telehealth services, immersive technologies, robots, to electric vehicles (EV), consumer goods are more dependent on computing power to operate.
To be able to power that computing capacity, these devices will need more energy over time because they won’t be only required to power themselves, but also create a stable flow of energy to collect and process data in real time.
If America wants to remain competitive for the years to come, it will need to produce and distribute as much energy as possible to keep up with this rising demand.
Tech companies like Amazon, Apple, Google, and Microsoft are addressing their energy needs by building their own energy sources rather than relying on the government. There are no low-energy/high-income economies in the world.
The relationship is rather straightforward. When incomes rise, the demand for energy and energy-intensive devices increases, as people can afford it.
However, it can also go the other way around.
When there is access to abundant and cheap energy, there are significant cost reductions for consumers and businesses, allowing them to spend that extra income in other things.
The rapid expansion of energy-intensive consumer products like AI or EVs has caused a sharp increase in energy demand in the United States.
This has strained the nation’s power grid, which has struggled to keep up with said demand. Thus, policymakers and academia have been scratching their heads looking for solutions to this problem.
The Biden administration has (rather ineffectively) pushed to lower demand by establishing energy efficiency mandates that would lower the energy demand for various appliances.
"Degrowth" activists have called for slowing down the economy and AI deployment in order to reduce energy consumption. This line of thought has sparked regulation against basic technology infrastructure, such as data centers.
Lowering energy demand will be impossible to do without sacrificing the economic welfare of Americans. Consumers should not have to choose between having access to affordable energy prices or compromising their livelihood. There is no need when options for increasing energy supply are readily available or being implemented as we speak.
The private sector has taken a forward charge for this energy abundant future. For example, Amazon, Apple, Google, and Microsoft have invested billions of dollars in either reactivating or building new nuclear power plants.
Some of them have also invested in the development of self-powered data centers, oftentimes using renewable energy systems.
While these companies are often targeted by environmentalist groups as energy consumers and pollutants, they are fueling the charge for a low or no-emission energy future through economically-sound investments.
Unlike the government’s misguided approach of constricting energy supply by using regulation and red tape to shut fossil fuels out of the power grid, these investments will build on existing energy capacity and expand Americans access to energy while lowering their carbon footprint.
However, these investments alone might not be enough to ramp up supply to its fullest potential. Once ground is broken and projects kick off, companies will often face an insurmountable amount of regulatory red tape that hinders its capacity to develop new power capacity.
As with most major building projects in the country, the current permitting regime has hampered American firms’ capacity to quickly build up necessary infrastructure.
For example, the average time to build a new transmission line in the United States is around ten years, with some taking longer than 20 years.
They also constantly face cost increases because of the continuous delays caused by these permits, which cause them to pay more interest over time or pay workers’ wages while no construction is being done.
The rising popularity of energy intensive products (like AI, EVs, or robots) means that America’s demand for energy is unlikely to go down anytime soon.
Thus, the administration’s current approach of trying to stymie energy demand or choke fossil fuel production is unlikely to yield any results.
Policymakers should prioritize a paradigm of supply maximization to satisfy energy demands and provide relief to an already stressed-out energy grid.
The private sector is playing a significant role by investing in additional energy production with clean energies like renewables and nuclear, but they're battling against a sea of red tape that makes these projects costlier and slower.
Taking down regulatory chokepoints will be vital if America wants to secure a stable energy supply chain that can power up the next tech-fueled economic revolution.
Juan Londoño is a senior policy analyst at the Taxpayers Protection Alliance (https://www.protectingtaxpayers.org)