One of the hottest issues in business and public policy today is the need for additional electricity generation to fuel broad economic growth as well as the explosive increase in the number of data centers. Well, take a look at electricity generation in the U.S. versus China.
Even though the U.S. economy is almost 60% larger, China generates 2.3 times as much electricity! What is going on here? China uses almost 60% of its electricity for industry whereas 26% of U.S. production is used for that purpose. In contrast, the largest use in the U.S. is for residential consumption at 38% as compared to only 17.3% in China.
Why is this vast difference in electricity generation important? One answer is the race to dominate the application of artificial intelligence. Currently, the U.S. has about 5,400 data centers as compared to 450 in China, but China has the world’s largest center and is rapidly increasing the number of what are called hyperscale facilities. In addition to data centers, efforts to bring manufacturing back to the U.S. will require large increases in both electrical generating capacity and distribution infrastructure. Who will foot the bill for what some estimate to be required capital expenditures over the next five years of at least $600 billion? A recent Bloomberg article pointed out that increases in overall costs at the nation’s largest electrical grid are resulting in consumers from Illinois to Washington D.C. seeing material increases in their utility bills starting this month. Get ready for a lot of media coverage and heated debate!!