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AI Data Centers: Have we thought this through? The Grid Can't Deliver at this speed. 𝗧𝗵𝗲 𝗨𝗦 𝗶𝘀 𝗲𝘅𝗽𝗲𝗰𝘁𝗲𝗱 𝘁𝗼 𝗳𝗮𝗰𝗲 𝗮𝗻 𝟴𝟬𝗚𝗪 𝗳𝗶𝗿𝗺 𝗰𝗮𝗽𝗮𝗰𝗶𝘁𝘆 𝘀𝗵𝗼𝗿𝘁𝗳𝗮𝗹𝗹 𝗮𝘁 𝗰𝘂𝗿𝗿𝗲𝗻𝘁 𝘁𝗿𝗮𝗷𝗲𝗰𝘁𝗼𝗿𝘆. Boston Consulting Group (BCG) Big tech and "The Grid" evolve at different speeds. 𝗧𝗵𝗲 𝗽𝗼𝘄𝗲𝗿 𝘀𝗲𝗰𝘁𝗼𝗿 𝗱𝗲𝗮𝗹𝘀 𝗶𝗻 𝗿𝗲𝗮𝗹 𝗮𝘀𝘀𝗲𝘁𝘀, 𝗽𝗵𝘆𝘀𝗶𝗰𝘀, 𝗮𝗻𝗱 𝗲𝗹𝗲𝗰𝘁𝗿𝗼𝗻𝘀—𝘀𝗹𝗼𝘄 𝗮𝗻𝗱 𝗵𝗲𝗮𝘃𝗶𝗹𝘆 𝗿𝗲𝗴𝘂𝗹𝗮𝘁𝗲𝗱. 𝗧𝗲𝗰𝗵 𝗰𝘆𝗰𝗹𝗲𝘀 𝗱𝗲𝗮𝗹 𝗶𝗻 𝗯𝗶𝘁𝘀 (𝟭𝘀 𝗮𝗻𝗱 𝟬𝘀). 𝗜𝘁 𝗶𝘀 𝗱𝗶𝘀𝗿𝘂𝗽𝘁𝗶𝘃𝗲 𝗮𝗻𝗱 𝗳𝗮𝘀𝘁. Consider this: Microsoft, Google, and Meta Facebook CAPEX surpassed $100 billion in 2023, driven largely by data center infrastructure. 𝗧𝗵𝗲 𝗹𝗮𝘀𝘁 𝘁𝗶𝗺𝗲 𝘁𝗵𝗲 𝗽𝗼𝘄𝗲𝗿 𝗴𝗿𝗶𝗱 𝘀𝗮𝘄 𝘁𝗵𝗶𝘀 𝘁𝘆𝗽𝗲 𝗼𝗳 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝘄𝗮𝘀 𝗱𝘂𝗿𝗶𝗻𝗴 𝗪𝗼𝗿𝗹𝗱 𝗪𝗮𝗿 𝗜𝗜. 𝗪𝗵𝘆 𝗶𝘀 𝗶𝘁 𝘀𝗼 𝗵𝗮𝗿𝗱? Building new electricity infrastructure—generation, poles, wires, transformers—requires significant capital and can take 10 to 20 years. 𝟭. 𝗔𝗜 𝗗𝗮𝘁𝗮 𝗖𝗲𝗻𝘁𝗲𝗿𝘀 𝗮𝗿𝗲 𝘀𝗽𝗲𝗰𝗶𝗮𝗹: • The nature of AI computation means instantaneous power demands. • 𝗔𝗜 𝘁𝗿𝗮𝗶𝗻𝗶𝗻𝗴 𝗰𝗮𝗻 𝗿𝗲𝗮𝗰𝗵 𝗳𝘂𝗹𝗹 𝗽𝗼𝘄𝗲𝗿 𝗰𝗮𝗽𝗮𝗰𝗶𝘁𝘆 𝗮𝗻𝘆𝘁𝗶𝗺𝗲 - 𝗟𝗹𝗮𝗺𝗮 𝟯 𝘁𝗼𝗼𝗸 𝟱𝟰 𝗱𝗮𝘆𝘀 𝘄𝗶𝘁𝗵 𝗶𝗻𝘁𝗲𝗿𝗿𝘂𝗽𝘁𝗶𝗼𝗻𝘀. • Demand response and Peak Shaving models can only help so much. 𝟮. 𝗖𝗼𝗻𝗻𝗲𝗰𝘁𝗶𝗻𝗴 𝘁𝗼 𝗮 𝗿𝗲𝗴𝗶𝗼𝗻𝗮𝗹 𝘁𝗿𝗮𝗻𝘀𝗺𝗶𝘀𝘀𝗶𝗼𝗻 𝗴𝗿𝗶𝗱 𝗰𝗮𝗻 𝘁𝗮𝗸𝗲 𝘆𝗲𝗮𝗿𝘀: • In ERCOT (Texas), a new resource interconnection takes an average of 3.5 years. • In other regions, it can take six years or more.. • ERCOT uses a “connect and manage” system—other regions don’t. 𝟯. 𝗧𝗵𝗲 𝘀𝘂𝗽𝗽𝗹𝘆 𝗰𝗵𝗮𝗶𝗻 𝗶𝘀𝗻'𝘁 𝗷𝘂𝘀𝘁 𝘁𝗶𝗴𝗵𝘁—𝗶𝘁'𝘀 𝗰𝗵𝗼𝗸𝗶𝗻𝗴: • Manufacturers report lead times as high as 4 years for substation power and generator step-up transformers Wood Mackenzie Power & Renewables. • High-voltage circuit breakers average lead times of 3 years to 5 years - a 130% increase year-over-year. • Medium-voltage switchgear is also impacted, with lead times more than doubling. 𝟰. 𝗠𝗼𝗿𝗲 𝗖𝗼𝗻𝘀𝘁𝗿𝗮𝗶𝗻𝘁𝘀 𝗛𝗼𝗹𝗱𝗶𝗻𝗴 𝗨𝘀 𝗕𝗮𝗰𝗸: • 𝗧𝗿𝗮𝗻𝘀𝗺𝗶𝘀𝘀𝗶𝗼𝗻 𝗖𝗮𝗽𝗮𝗰𝗶𝘁𝘆: There’s a lack of available transmission capacity to accommodate new energy resources. • 𝗥𝗲𝘁𝗶𝗿𝗶𝗻𝗴 𝗚𝗲𝗻𝗲𝗿𝗮𝘁𝗼𝗿𝘀: Over 100 GW of aging generation capacity is set to retire in the next decade U.S. Energy Information Administration 𝗪𝗵𝗶𝗹𝗲 𝘁𝗵𝗲 𝘁𝗲𝗰𝗵 𝗴𝗶𝗮𝗻𝘁𝘀 𝗮𝗿𝗲 𝗺𝗼𝘃𝗶𝗻𝗴 𝗳𝗮𝘀𝘁, 𝘁𝗵𝗲 𝗲𝗹𝗲𝗰𝘁𝗿𝗶𝗰𝗶𝘁𝘆 𝘀𝗲𝗰𝘁𝗼𝗿—𝗴𝗿𝗼𝘂𝗻𝗱𝗲𝗱 𝗶𝗻 𝗽𝗵𝘆𝘀𝗶𝗰𝗮𝗹 𝗿𝗲𝗮𝗹𝗶𝘁𝘆—𝗶𝘀 𝘀𝘁𝗿𝘂𝗴𝗴𝗹𝗶𝗻𝗴 𝘁𝗼 𝗸𝗲𝗲𝗽 𝘂𝗽. 𝗦𝗼𝗺𝗲𝘁𝗵𝗶𝗻𝗴 𝗵𝗮𝘀 𝘁𝗼 𝗴𝗶𝘃𝗲. What did I miss? #datacenter #ai #energytransition Arcus Power Corp Boston Consulting Group (BCG)