Chapter 1: What is the main topic discussed in this episode?
Welcome to the podcast. I'm your host, Jaden Schaefer.
Chapter 2: What is the Trump administration's $15 billion power plant initiative?
Today on the show, we're going to be talking about the latest deal from the Trump administration in regards to having tech companies buy $15 billion worth of power plants. Now, this is coming at a time when a lot of these big tech companies are needing more and more power to help fuel the compute for training all of their AI models and to power all of their data centers.
Chapter 3: What alternative power solutions are being considered?
So today on the show, I want to break down how this could shape some of America's power consumption and how this deal worth, you know, $15 billion of power generation is going to affect the nation's electrical grid and essentially the, you know, what's going to happen if we don't do this. This is interesting as America is now trying to stay competitive in this global AI race.
There's a lot going on here. Before we get into the story, you probably pay for multiple subscriptions to get access to a lot of these different AI tools. It can definitely add up fast. I had a very similar problem, and so I built AIbox.ai.
Chapter 4: How does the energy source debate affect AI deployments?
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Chapter 5: How are tech companies impacted by rising energy demands?
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Chapter 6: What critiques exist regarding the accountability for energy consumption?
So you don't have to juggle tabs. You don't have to waste money on overlapping subscriptions. If you want to give it a try, there's a link in the description to AIbox.ai. All right, let's get into the story. So the Trump administration is joined by a group of governors in the mid Atlantic and Midwest.
I think most it's kind of bipartisan group that's coming together on this, but they've all asked PJM interconnection. So this is the grid operator that serves about 65 million Americans. It's over about 13 different states and it is, you know, holding on quote unquote emergency power auction. to procure new generation capacity.
So the idea is that tech companies, especially those that are building these huge data centers everywhere, are going to bid on 15 year power contracts that could help underwrite the construction of a lot of new power plants, essentially trying to keep pace with all of the surging electrical demands.
And personally, as someone who has seen their electricity cost, I you know, when I was living in Arizona, literally double as a lot of new facilities, a lot of subsidies and government grants went out to a lot of these companies, building data centers, building chip fabs. And then, of course, the electrical bill of everyone else goes up as those ones are subsidized.
So in my opinion, this is a fantastic program. We need to build more power generation. This is something that's definitely, I think, on the top of everybody's mind in the industry. And how to do that is something that we're all discussing. This deal right here, I think, could unlock up to about $15 billion in new generation capacity.
And of course, electrical demand from data centers is absolutely skyrocketing right now. Utilities are really struggling to keep up because all of the new generation takes years, and it is a mass investment if you're going to build them. So right now, the grid really can't run on air, you know, it can't run on paperwork.
So it needs actual concrete, physical plants, and it needs these things online. So there's a lot of different strategies that, you know, companies are using to try to make this a reality. One from Microsoft as they went to the decommissioned nuclear power plant on Three Mile Island and said, hey, if you guys can recommission this, we give you a billion dollars to do that.
And then we'll make a contract to buy all of the power that comes out. So we're seeing, you know, decommissioned nuclear power plants come back online or start getting retrofitted to come back online to generate electricity. There's a lot of deals. I mean, we even see like there's a whole scandal with XAI and I believe Memphis where
They had a big data center there and they literally just brought on like thousands of these portable diesel generators and turned them all on to power their whole facility because they couldn't get enough power from the grid. So obviously, this is a very acute problem for a lot of these things.
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Chapter 7: What are the implications of the PJM grid operator's actions?
So I think this is overall a good thing. Something else that I know a lot of people like to talk about is a lot of these renewables, you know, electrical sources, solar, wind as kind of being the silver bullet. I think that they're really important for our energy future.
But as far as what we're doing today, I think something that not a lot of people like to talk about, a lot of the mainstream news does seem to gloss over. is the fact that solar and wind is intermittent. So they only generate when the sun is shining or when the wind is blowing.
Data centers and a lot of these really heavy industrial loads, they don't get to take, you know, any sort of breaks or clock out when the grid goes quiet at night. So they need a firm, dependable 24-7 electricity. Now, The solution in the past for that has been battery storage, and today is battery storage.
This definitely helps, but it definitely is not a full replacement because batteries paired with solar can cover, you know, definitely a few hours of demand, but they are still limited for long duration loads. And Something that I had an experience with when I was growing up, I sailed from California to the South Pacific on a sailboat, which we largely were powering by solar.
And, you know, we would have times where we'd have a storm blow over for like four or five days of really cloudy and our batteries were completely depleted. It was really scary because all of our like an autopilot navigation systems, all of our charts, like, you know, everything we're running on our ship was depleted.
depending on these batteries in the solar, and it was all starting to glitch out and stopped working. And you know, lucky for us, the storms passed, we've recharged our batteries, we moved on.
But this has always kind of been something that's reminded me that while these are amazing, you know, options, we use solar panel for like a whole year on this ship, it's not always sustainable, you do need, I think, multiple facets, multiple types of energy to power this stuff. I think for a lot of these kind of data centers, it's going to be the same thing.
When a weather event happens or there's a really prolonged, you know, cloudy period, you still need very consistent solid energy. And so solar and wind can't keep up with that forever. So I think this is why right now the current administration is putting a push to include some traditional baseload capacity.
And I think at the end of the day, the best option is multiple sources of energy production. OK, so I think something else I've heard a lot of people critical on this is, you know, like there's a whole TechCrunch article that's like, you know, asking why you'd make tech giants pay for the power that they might not use. And like, maybe this isn't what we need to do.
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