Power Hungry: Can Our Grids Evolve Fast Enough for AI's Appetite? | with Amy Myers Jaffe

Energy expert Amy Myers Jaffe returns to EvC to chat with Ed about Energy and Artificial Intelligence. 

Nearly every aspect of the economy seems to be impacted by the stunningly rapid development of AI. Energy is no exception. Ed and Amy have a wide-ranging discussion that covers a lot of ground and touches on several hot topics, including: 

• How AI is transforming the production, distribution, and consumption of energy; 
• The energy needs of data centers; 
• Whether or not AI is an asset or liability for the clean energy economy; 
• The role of tech companies; 
• The geopolitics of AI; 
• Security vulnerabilities created by increasingly AI-dependent energy infrastructure; 
• And Canada-US relations.

(01:35) Skip Intro

Detailed Notes available on the show page

About Our Guest:

Amy Myers Jaffe is a leading expert on global energy policy, sustainability, and geopolitical risk. She is widely published on energy, commodity markets and finance and is author of several books, including her most recent book, Energy’s Digital Future and Oil, Dollars, Debt and Crises: The Global Curse of Black Gold. Jaffe serves as Director of the Energy, Climate Justice and Sustainability Lab at New York University’s School of Professional Studies and is a research professor who teaches graduate-level courses examining clean technology innovation and business and global climate finance. Jaffe is a regular contributor to the popular podcast “The Energy Gang” and a frequent media commentator in television and print media, including the Wall Street Journal, Financial Times of London and CNN International. Jaffe holds a career prize in energy economics from the US Association for Energy Economics and also served as the organization’s President in 2020.

Produced by Amit Tandon & Bespoke Podcasts

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Transcript

[00:00:00] Ed Whittingham: Hey everyone, Ed here. On April 25th, I spoke with Amy Myers Jaffe. Keen EvC listeners will remember that we had Amy on the show four years ago to the month to talk about Decarbonizing transportation and the book she had just published called Energy's Digital Future. Well, I thought at high time to have Amy back on to expand upon the themes in Energy's digital future. For this time specific to energy and artificial intelligence. 

[00:00:30] Amy Myers Jaffe: These services that are provided by the hyperscalers and the systems that they need to train, the artificial intelligence has to be available, quote 24 7. And then, so what's the electricity of 24 7? Because you and I in our house our utility doesn't think of us as 24 7 customers.

[00:00:51] Ed Whittingham: We covered a lot of ground, including how AI's transforming the production, distribution, and consumption of energy, the energy needs of data centers. Whether or not AI is an asset or liability for the clean energy economy, the role of tech companies, the geopolitics of AI security vulnerabilities created by increasingly AI dependent energy infrastructure, and Canada US relations.

Amy is formally the director of the program on energy security and climate change for the Council on Foreign Relations. Currently, she's the director of the Energy Climate Justice and Sustainability Lab at New York University School of Professional Studies. Amy and I got to know each other in the mid 2010s when I sat on a World Economic Forum Committee that she chaired looking at the future of the oil and gas industry.

It was just Amy and me for this one, but we certainly didn't lack for content to discuss. I hope you enjoy it. Now here's the show, Amy Myers Jaffa. Welcome back to Energy versus Climate 

[00:01:49] Amy Myers Jaffe: Ed. Great to see you and great to be back on the podcast. 

[00:01:52] Ed Whittingham: You're, you're actually doing triple duty today because a, I've just been keen to have you back on energy versus climate because you're Amy.

But I'm also. Keen to do what pretty much every podcaster, uh, in the business these days on energy and climate issues is doing, and that's talk about AI and energy use. The triple duty part is to tie in US climate, energy policy and some geopolitics, and that's to help our Canadian listeners understand what the Trump administration is thinking and planning.

To the extent that that's actually possible. We, we know the vagaries of the Trump administration, but I'm hoping we can, we can cover all those topics. 

[00:02:32] Amy Myers Jaffe: I, I'm looking forward to it. I do teach the clean tech class here at New York University. Uh, but this summer I'm offering a special seminar on AI and energy.

So, uh, it's front of mind. 

[00:02:45] Ed Whittingham: Awesome. And I think that would be of huge interest. Well, to me and to my listeners, we absolutely have to start with Sam Altman's comment on X like a couple of days ago about the extra electricity costs associated with being polite to chat GPT. And for those who haven't heard or didn't see it on x, uh, a user posted.

How much money has AI lost in electricity cost from people being saying, please and thank you to their models, and Sam Altman responded, tens of millions of dollars well spent, he added, you never know, which begs Two questions. Amy, do you use AI tools like Chatt, PT, or Perplexity or Claude ai? And if you do, do you use please and thank you with them?

[00:03:30] Amy Myers Jaffe: I do not use please and thank you. I didn't even know that was a thing. So I guess I'm not an educated user. I, from time to time, uh, and I'm trying to organize PowerPoint slides I will ask the mechanism to. Give me its best ideas for organizing a presentation and here's the topic and here's the input.

And uh, I do find it's very helpful. So I have used it. I have other friends and family that have used it for different things. And what I will tell you is there is this slippery slope. Where you get the thing too involved in your thought process, and then you get dystopic responses to your sleep patterns or whatever because you're spending too much time discussing your ideas with the ai.

So I don't typically do that. I'm very utilitarian like. 

[00:04:29] Ed Whittingham: It sounds like we use the tools in a similar way, although I did try for shits and giggles a few weekends ago actually having a voice conversation with chat GPT just to see what that was like. I must admit I was a little bit creeped out, but it was, I'll give it credit.

It was pretty seamless. 

[00:04:46] Amy Myers Jaffe: I read an article about, you know, people using it as their like counselor because it's hard to get a counselor appointment. And and I was talking to a friend. Above that function. I have a friend who is in psychiatry and we were laughing because, you know, part of the problem with people when they go for counseling is that they have self deceptions.

And so I was joking about how you'd be talking to, uh, the AI and it wouldn't know. Which is the self deception and which is the reality of the things that are putting you under stress. And that, that, I thought that would be like a huge problem in using it. 

[00:05:26] Ed Whittingham: On just on the politeness there, uh, there was a commentary in the New York Times by soap and Deb saying, saying, thank you to chat.

GPT is costly, but maybe it's worth the price. And just from a sort of a human cultural perspective, it's in today's New York Times now. Now that we've got that outta the way though, I do want to talk about AI and energy use. So we know that like big tech is spending, uh, I think hundreds of billions on new data centers and also on a newspaper note.

Just and as a jurisdictional example, just today in the Globe and Mail, there is the article, there was an article called Alberta has a big vision to build massive AI data centers, but do they have the power to handle it? Which is great. Just in this morning's newspaper, I. And there's a graphic in the article showing each data center that's proposed in Alberta and how much electricity each company is requesting in megawatts.

And it's a little under 12,000 megawatts of projected additional load. Now, Alberta's peak electricity demand typically reaches between 11 to 12,000 megawatts, and that's, you know, like the winter load. 

[00:06:32] Amy Myers Jaffe: So we're talking about doubling use. 

[00:06:35] Ed Whittingham: We're talking about enough power to power an additional Alberta, so we have, I mean, Al Alberta's got a cushion.

It's got like 23,000 megawatts of capacity, but in terms of the projected additional load, it is equivalent to current peak demand of, you know, 11 to 12,000 megawatts. So that's far more than I expected for my local provincial. I didn't think it would be that large. So I'm wondering in the us, which I think still houses the majority of the data centers that, that service the internet in the world, how is AI transforming energy production, distribution and consumption patterns through its data centers and, and across different regions?

I know that's a big question, but I'd love to to hear your thoughts there. 

[00:07:22] Amy Myers Jaffe: So I think part of the issue in the US is you, you get these estimates. And, um, and they're all over the map. Conservative estimates are that data centers are now about 4% of US electricity load, and that that could double the 9% by 2030.

So that doesn't sound big, but the US is, a very big market. And then it really varies regionally. So we're talking about the core places like, you know, PGM, which is sort of in the mid east, um, part of the country, or Ercot in Texas. Is talking about sort of exponential growth. I, I think, you know, from a place where the United States, load growth was flat for two decades, so the change is really that there's a change.

Each utility is coming in with an estimate of the request it's getting right. There's probably less true in Canada, more true in the United States. So if a hyperscaler goes to talk to someone in PGM. And they don't like what they hear, so then they go and talk to someone in Ercot, um, or they go and talk to someone in Arizona or ca kaiso in California.

You know, is that getting double counted? Like when you get all these estimates and all these utilities are saying, talking about their demand, there's a little bit of a, a fuzz factor in it because, you know, we don't know. Where all those demand requests are gonna are gonna lock down. Uh, here in the United States, there's a lot of discussion about how much of that is gonna require new natural gas.

How much of it means that there are coal plants that absolutely can't, that were planned for retirement sometime in the one to three year period that cannot be shut down. You've already got the new Trump administration following on a policy that the Biden administration had also endorsed, which is to give out public money to help a whole tech.

Reopen Palisades, uh, one would presume there's, there's three nuclear plants, three mile Iowa and so forth. There are a couple of closed nuclear plants that are, it's possible to restart. And so, you know, there's some talk about what's the financing plan, uh, for doing that. Part of the issue here is that a lot of what's in the queue to expand generation capacity in the United States is actually solar and batteries.

I heard one very interesting statistic that coming on in this coming year, we only have four gigawatts of natural gas plants that are, on the books. And that when you take the sort of, you know, three to five year, three to five year view, we're talking about maybe 60 gigawatts of natural gas.

That could be extremely expensive versus. A thousand gigawatts of battery capacity that's in the queue. 

[00:10:16] Ed Whittingham: So, yeah. When I mentioned, uh, soap and Deb's, uh, commentary in the New York Times today about whether we should be polite or not to ai, he had this statement that it is pretty common that I hear, and it's, he says, the, the, the AI boom is dependent on fossil fuels, but I.

That, uh, obviously that's a gross oversimplification. What you're saying is in the United States, it's actually you've got a tremendous amount of solar and, and, uh, battery capacity that's in the queue. How much though? I mean, the US is struggling to build transmission. I. New transmission capacity. Yes. Tell me about the data centers.

If, if these utilities, and they might be fudging the numbers a bit or double counted, but they're still projecting you're gonna double electricity sales. Yeah. What, where does transmission fit into all of this? 

[00:11:00] Amy Myers Jaffe: Well, I mean, transition of course is a huge, uh, barrier to get the transmission built. And so there's been this swirl in the United States, which may eventually happen in Canada if you also have equal problems with transmission, that that is why we've restarted.

These nuclear plants that were retired. The theory behind it is there's existing transmission that's underutilized, and I'm going to just have this startup plant go back and the transmission's already there because I, it's physically still there. You have people running around in the country looking for underutilized transmission lines.

That is because the scale at which people put in utility solar or, or onshore wind or whatever, is at a much smaller scale to the sort of gigawatt ishness of like nuclear or, or a retiring coal plant or so forth. So people are looking for sites that have the transmission that's underutilized and you know, you get people.

Talking about all kinds of interesting things because natural gas is actually not available in the timeframe that people are speaking about. Same thing with, you know, small nuclear reactors. I mean, if we're needing electricity expansion in the one to three year period, that's not building a new natural gas plant, and that's certainly not building a first of a kind nuclear plant.

So I've heard some people talk about how. Is there a natural gas peaking plant somewhere that you could combine with some of these batteries that are already in the pipeline and charge those batteries, not just with new renewables, but could you charge those batteries with existing, underutilized, other kinds of capacity, and then have that fill the gap?

And when we talking about the gap, again, we need to make a distinction. I. Right. Is it that I'm adding a gigawatt of hyper scaling demand and I don't have any generation capacity to handle that? Or do I have a projection that at peak times in a particular location, I don't have enough electricity to meet peak?

Because if my concern is peak and only peak, I'm talking about, four hours a day for three days in the summer, or four hours a day in the dead of the winter. Then I might have some other solution that could relieve that congestion, you know, like batteries or people don't like it when I say demand response, I get heckled. But, you know, demand response today is not, I'm calling you up and telling you to turn down your thermostat. Demand response today is on a utility. You signed an agreement and I'm reaching into an industrial or commercial user, or even a residential user and turning down the thermostat or turning something off.

[00:13:56] Ed Whittingham: Do you get heckled when you use the term virtual power plant? 

[00:13:59] Amy Myers Jaffe: Not as much as, when I say demand management, I get super heckled. Okay. Especially when I say it's gonna be by software. Yeah, right. That, that, that puts antennas up in a way in, you know, when I'm speaking to electricity groups and so forth, if I then deconstruct it and I ask them rhetorically in their service area has their utility.

They, they themselves as a utility or has their PUC done a projection on how temperatures might, and weather patterns might change over the next five to 10 years? And are they, do they have a capacity to, uh, adjust to that? Then everybody gets very quiet and they wanna hear about software. 

[00:14:38] Ed Whittingham: Now, maybe it'd be worth if you could put your professorial hat on, and just for our listeners to find what is a virtual power plant and, and the kind of devices that are included in them, like, and how do they work?

[00:14:49] Amy Myers Jaffe: Your electricity has to be mashed exact supply demand. So your utility working together with your, you know, uh, uh, system regulator, uh, has to make sure that at every moment in time, the electricity that's being generated and inserted into these wires, whether that's the transmission wire or the distribution wire to your house exactly matches what's being used, which we call low and increasingly.

Uh, places like California and Texas have really, that have a lot of variation. Load at certain times of year or certain times of day have yields batteries to, you know, you wouldn't. You have low demand. You have say, high solar production in the middle of the day and not so much demand. So you take that extra solar energy and you put it in the batteries and then you discharge the batteries at 4:00 PM to 7:00 PM when people are home turning on their stuff and you have extra load.

What a virtual power plant does. I, I'll describe a residential one 'cause that's sort of, I think, easier to grasp for the average listener. Um, but you could do it with industrial users or commercial buildings and so forth, is I'm using some combination of hardware and software to create. Either an automated, you know, say somebody has a smart home system or a smart thermostat, or they have a home battery, or they have a car that can, has bi-directional abilities where you can drain the battery or charge the battery in your home integrated system.

So I'm going to. At these moments in time, I'm gonna contract. Sometimes there's a vendor like a Tesla or Sunrun, and sometimes it's your actual utility if you, you're close to the border. If people have friends in Vermont, they can ask them about green power 'cause they have an official program doing this.

So I aggregate. Everybody's battery or I aggregate the, the margin in everybody's home system that they agreed to do. Like, I agree that the utility can lower my use by 10% or 5% by making my house a teeny bit warmer. Or obviously everybody's refrigerators staying on, but, but, you know, changing the timing for my washing machine or whatever.

And, um. And they do that, they aggregate all of those contributions. So either the demand, lack of use, change of timing, I guess I would say change of timing, use, um, aggregation or they aggregate the bunch of batteries and therefore it's like there's a power station. Because when you add all those small changes in different residences together.

It can add up to be, you know, quite a bit of electricity that's saved and therefore. Um, if there's extra use for air conditioning with people who are not part of the virtual power plant, the virtual power plant participants are basically supporting that extra use. 

[00:17:57] Ed Whittingham: Got you. And so, and, and, uh, going back to the residential example, it's enabled by rooftop, solar home batteries, like, like power walls, uh, EVs with bidirectional charging, smart thermostats, hot water tanks, all of those things.

[00:18:10] Amy Myers Jaffe: Correct. And, and if you have an HVAC system, we're gonna, you're gonna integrate in your HVAC system. So that's, uh, we're moving to that world I think in someday. This is my prediction 'cause, you know, uh, I'm a futurist and I wrote a book, energy's Digital Future, someday, uh, this system that I'm describing will be normal.

And then we'll also have centralized, you know, electricity assets that also participate in this more integrated system. Right now we're sort of working out the hiccups. Integrating these systems into the general stability of the grid. I mean, you can understand intuitively if you've lived through a wildfire in Canada or it's, there's been a heat wave or something else, or in the winter and there's been a blackout where you live and you think about, you know, a lot of times people buy their own home generator, right?

So what we're really talking about is getting to a sophisticated place where instead of. You and I make an individual decision about how tolerant we are to this blackout that we have no control over. We're gonna have a system where we all participate in some automated roboticky kind of system where the software is helping us all never have to have a blackout.

And for those listeners who are skeptical, 'cause I'm sure there's a lot of you in the end, even in a place like Texas. Where people of course are passing laws and rules that say it has to be natural gas and committing $5 billion to paying extra money to support the construction of natural gas. The bottom line is the installation of batteries is now 10% of how they have avoided blackouts over the last 12 to 18 months.

And it was definitely true during the California electricity heat wave. In September, 2022, and it's continued to play a huge role, uh, in California in having California's not experienced blackouts. 

[00:20:14] Ed Whittingham: So the California example, a virtual power plant in California is gonna tap 10,000 home batteries during a heat wave to supply whatever it is, a hundred megawatts of power when the grid needs it most 

[00:20:26] Amy Myers Jaffe: correct.

[00:20:27] Ed Whittingham: I'd love to talk and talk a little bit more about the tech companies because you said something intriguing around Three Mile Island, and I just wanna test my understanding. I think it's Microsoft is, is. Recommissioning Three Mile Island as a nuclear plant for its AI operations. 

[00:20:45] Amy Myers Jaffe: Well, and and lemme just say the following thing.

Sure. 'cause there's been some misnomer ring, right. Because they're not taking that nuclear plant behind the meter and making a direct connection between their data center and the nuclear plant. What they're doing is they're committing to the fi, the finance to enable the utility. To restart that nuclear plant and provide that power to the grid.

[00:21:12] Ed Whittingham: Okay, gotcha. And, and so, 

[00:21:13] Amy Myers Jaffe: and just to make that distinction, yeah. And I only make it not because you didn't understand that, but again, for the listeners, because people did talk about these hyperscalers doing their own thing behind the meter. Yeah. Right. Which means they're gonna have this dedicated, like you and I have a generator in our garage to help us in a blackout, you know, could they do the same thing and run their data center off it?

Um, the problem with that, of course, is if your real concern is you've got, you know, jillions of dollars worth of chips here and you wanna utilize every second of them and not waste any time, you don't want to have. A freeze in Texas, turn off the natural gas plant that you have behind the meter and now you are off.

So what you have to do is you still have to negotiate with the local utility and the PFC because if you're gonna be connected at all to the grid, it doesn't matter. We're adding an asset. Um, we still have to do all the rigamarole that we do to make sure that when we add that asset and we add your load.

Everything's still gonna operate and we're not gonna leave the the bill with the taxpayer or the rate base. 

[00:22:24] Ed Whittingham: Yeah. And that's actually, I want to touch upon that and, but just going to that point, that's why in this Globe article, I. My local electricity system operator, the Alberta electricity system operator is totaling all those those data centers and looking at it and it's, you know, the total load projection would be equivalent to peak consumption in Alberta.

The one actually, interestingly, and. To the point of grid versus, uh, not grid, off grid. There is a proposal in Alberta that wasn't factored into those numbers that the ASO is projecting that's being pitched by O'Leary Ventures and Canadians know Kevin O'Leary. You might have heard of him because he is been on I think Sharks Tank.

[00:23:04] Amy Myers Jaffe: Yeah. He is a star on Shark Tank, which I watched. So, you know, all good. Yeah. Know who he is. 

[00:23:09] Ed Whittingham: Yeah, he was, uh, on Dragons Den, the CBC equivalent prior to Sharks Tank, but they've got a, a proposal called Wonder Valley for 7,000 500 7500 megawatts, but off grid electricity. I. Off grid. And my understanding is in the US these data centers are going in, it's a combination of on-grid and off-grid, isn't it?

[00:23:31] Amy Myers Jaffe: I, I don't wanna make a definitive statement because it's not like I'm behind the wall of every single one of these conversations. I think people both on the hyperscaler side and on the grid side are trying to avoid these off-grid solutions. 

[00:23:46] Ed Whittingham: Okay. 

[00:23:46] Amy Myers Jaffe: Right. I think in the United States it's, when we're talking about that much electricity, people are, are.

Not a hundred percent willing to really put their money down on, behind the meter, off grid solutions. Right. There's a lot of talk about it. You know, a lot of people talking about taking stranded natural gas and someplace where people drill for shale in the United States and take all that glass that's being flared or whatever and pipe it into a data center and have it be an off-grid solution.

Um, and you've seen. Some announcements like that, but I don't think that's the general trend. I think that that's not really attractive to most of the hyperscalers because the whole point is they want reliability. And even though people say natural gas is so much more reliable than coal, or coal is so much more reliable than everything, uh, weather being what it is in the United States, you really can't say.

That coal is reliable because coal piles freeze and you really can't. And, and you can have a hurricane and it can interrupt a thermal plant, right? Or flooding or whatever. And you really can't say that about natural gas either. Um, and so I, I have to say, because, you know, I write and, and read about a lot of different aspects of energy and climate change and, for the Canadian listener. I know there are a lot of people in the United States that try to downplay whether climate change matters, but here in the United States the amount of disruption that comes from weather is enormous. Mm-hmm. And one of the experiences we know from having these giant, uh, storms all through Florida is that the solar energy.

Tends to do better against weather. Now, there was, in North Carolina, a solar farm that did get bad, badly damaged. So I'm not saying it's never, never, um, but the idea that somehow, you know, natural gas doesn't get necked off and we, we have to avoid, you know, this kind or that thing, you know. Hydro, of course Canada's blessed with hydro.

Uh, but you know, other places that are blessed with hydro like Brazil and, and and elsewhere have had just some unusual drought and then all of a sudden there is snow or not? No, but there's a lot less hydro than was expected. So, you know, even hydro is not as. A hundred percent durable, 

[00:26:23] Ed Whittingham: which is a talking point that shows up in President Trump's speeches too, when he talks about coal as king.

And I heard him at some international form, I can't remember what it was, but just in the last few weeks, talking about coal as king. And it's not weather dependent, 

[00:26:36] Amy Myers Jaffe: but that's untrue, right? With all due respect to the president, even in the southern parts of the United States, these coal piles freeze and then you, you, you have trouble with your stored, uh, uh, fuel.

But, um. But you know, I mean, weather can hit any kind of plant. And what we, what do we know from Puerto Rico? I mean, we know that the entire island, which was dependent on a centralized natural gas, thermal plant, was completely knocked out in a way that it was gonna take two years, uh, to restore it. Let's hope that we don't have these terrible weather events, um, or wildfires that affect these plants.

But we do know that the giant centralized plants, if they are damaged in weather, extreme weather take a lot longer to repair than small scale electricity solutions. 

[00:27:30] Ed Whittingham: Getting back to the tech companies. So with considerations like weather, what are they actually when they select their locations for the new data centers, whether it's Kevin O'Leary Ventures in Wonder Valley here in Alberta, or Microsoft at Three Mile Island, or all the data centers in Virginia, which I think powers 70% of of the internet and now data centers going in in Texas and Georgia.

What factors are they considering? And as a follow on, because the tech companies I, I've dealt with, many of them have been champions of clean energy and they've, uh, helped to rev revolutionize a virtual PPA market here in Alberta, Amazon being a big leader and, 

[00:28:08] Amy Myers Jaffe: and here in the United States as well. 

[00:28:10] Ed Whittingham: Yeah.

And, and helping big solar projects like Greengate Powers, traverse Solar Project, get across the FID line through virtual PPA agreement. But are, are they now backing away like so many companies are from their climate commitments and making sort of the grid carbon intensity, less of a factor and their impact on that grid intensity less of a factor than say, a few years ago.

[00:28:34] Amy Myers Jaffe: So. I would say that you can't lump them all in together. I know that's not an attractive answer, but that is the correct answer. Right. I'll 

[00:28:41] Ed Whittingham: take it. Right. 

[00:28:42] Amy Myers Jaffe: So, uh, I think I won't name names so that I don't get like a hundred phone calls when the podcast ears, but there is one big hyperscaler that is definitely pivoting to natural gas.

[00:28:54] Ed Whittingham: And, sorry, Amy, I should have asked you this at the top. Can you define Hyperscaler for our listeners please? 

[00:28:59] Amy Myers Jaffe: You have these giant corporations. That are either supplying, um, services in the cloud, right? So they're providing sort of, uh, online data services for businesses and for us as individuals. But they are also adding to those services, so it's not just, you know, your accounting and so on, those kind of business solutions.

But now they're providing these artificial intelligence services. Right? And that could be anything from, you wanted to figure out how to automate certain customer service, uh, records or sales records or something like that. To something much more complex like you're going to run an entire fleet of robot taxis that will have no drivers and pick people up.

Um, all of that requires a tremendous amount of computational time. If you think about a car like a Tesla with the software to operate the car is is you don't take the car to the shop to get that. It just gets downloaded to the car. I think that we're gonna see more and more of that for all kinds of.

Machine learning automation solutions. Are you gonna have a robot in your house doing a function? Are you having robots in a hospital do a function? You know, all of that software and software upgrading and the training of the soft, the, the software solution and connecting it to the hardware solution, all of that takes a tremendous amount of data processing.

And so the companies that do that work. We now call Hyperscalers the Microsofts, the, the, um, Facebook, the Google, and those companies. But we're starting to get, you know, new companies we've never heard of that are, you know, like now we all know Open ai. Um, but you know, there are other companies coming.

So, so the point is you have these companies and their, their, their services are increasing and therefore the electricity needs for those services are increasing. You know, part of the thing we all know is that you do not want your bank that to not be able to access the cloud and the data that you use when you use your credit card or you go to the bank.

Because when that goes down, 'cause there's no electricity, you can't buy anything and you can't do anything online because now you can't access your banking resources. So there's this. Term. Now that's very in vogue to say that the services that are provided by the hyperscalers and the systems that they need to train the artificial intelligence has to be available, quote 24 7.

And then, so what's the electricity of 24 7? Because you and I in our house. Our utility doesn't think of us as 24 7 customers. We are customers that, you know, get cut off sometimes when things go wrong. And so we try to come up with an electricity system where these vital services, um, and when you think about vital services, you and I might think about vital services like hospital services.

Um, but when you're talking national security, we're talking about, vital services like missile silos and the operation of satellite data and, you know, all these different things that we do on the ground that are about our national security. And so, at least here in the United States, there's been a big drum pound about how AI has to be a matter of national security and we have to stay ahead, uh, for military applications and therefore it means we have to stay ahead, period.

Then we have to have the electricity to train all this AI because it's a matter of our national security. 

[00:33:02] Ed Whittingham: Yeah, and that, that's a nice segue into the geopolitics of AI because countries are racing to build up their ai AI capacity, and now we're seeing this interesting new layer of energy be geopolitics emerge, which you just touched upon, where you have the need to access reliable.

Electricity and affordable electricity and create digital sovereignty as well. So the US seems to be leading that race and that's, that was fine until recently as a Canadian we're, you know, we still get uncomfortable and a little bit anxious when President Trump says would be a better as a state than as a country.

Which, which countries or regions do you think are like. Best position to become those like AI energy hubs and are gonna win this, this I geopolitical race. And, and which ones do you think are gonna lose 

[00:33:56] Amy Myers Jaffe: here in the United States regionally? If you have extra transmission, you're suddenly winning. So I don't know much about the transmission system in Canada.

What I would tell you is that hydro, as long as you don't have a drought, is a fantastic resource. Right and has been reliably conveyed from Canada to the United States, uh, as a major benefit to both economies. So one of the ways to make your electricity more stable, right, is that you trade electricity across the border.

So if you. You know, Texas has a lot of natural gas and a lot of wind and all this electricity, and they had too much electricity. They could provide some of it to Mexico. And then Mexico provides a lot of different resources, uh, in manufacturing and other things to the United States. That was the whole North America, you know, trade right?

Is part of that trade is energy trade, big amount of energy trade in all directions. Electricity going from the United States to Canada, electricity coming from Canada to the United States, oil coming from Canada to the United States. Petroleum products coming from the United States to everywhere. There was just an integrated, more stable system because we were integrated.

When you start talking about everybody's growth, and you have to have this growth because you can't have your citizens be without electricity in a heat wave. We're talking life and death in national security. If you need to be having, you know, some data crunched, we're talking possibly life and death, it can test even the best of neighbors, and we're seeing that not only here in the border.

Areas with the United States and Canada and thinking about the balances for energy trade and, um, how important they are and having to think as a group. You have that in Europe and the Europeans have had some tremendous challenges with the war in Ukraine and the impact that that has had on energy in electricity trade, and natural gas trade across Europe.

The Europeans to date have done a very good job of building new interconnections to have more efficient use. If there was spear hydroelectric or spear nuclear capacity or spear anything anywhere, or they're talking about integrating new offshore wind or whatever it is the Europeans are trying to do, there's been a lot of public funds allocated to do things like, for example, connect the Baltics.

To Poland, to Finland and so forth, so that they could have stable electricity and not be subject to the electricity whims of Russia, um, which has created a new security problem to police and, and make sure that those cables remain stable. I think people need to step back and think about what would a global conflict look like?

What does geography dictate and who? Is Switzerland really neutral? I mean, no. The electricity system of Europe is all connected in together and, um, and if the Russia stock cutting cables all around Europe to knock off their, or do a cyber attack or something like that, you know, everybody's a problem.

I mean, the cutoff of natural gas, of course, was more severe a little bit. Towards Germany and, and, and, and some of the, uh, other count border countries that relied a lot on Russian gas, but the sort of pain wound up being spread across the entire continent in the end because people trade and then it became global, right?

Because it moved LNG from one market to another. I mean, the irony is. People had this big congratulations about how there was the LNG, you know, was such a great tool and we didn't really have, you know, no one froze in Europe and there were no blackouts because of lack of natural gas. But guess what?

Those blackouts happened in Pakistan and sections of India, um, and other places in Southeast Asia because they couldn't afford their LNG. And therefore they, they, they, they didn't have enough natural gas to keep their power stations going. 

[00:38:30] Ed Whittingham: Yeah. And with rich companies like Germany at the outbreak of the war could afford to go hoover up all those Qatari, uh, natural gas reserves and leaving other, those, other countries in, in the lurch here in Canada.

It's, it's been interesting and, you know, we're going through this period of a reshaping of traditional alliances and strategic partnerships. And first and foremost, between the, the Canadian and the American. Relationship. One of these silver linings that might come out of all of Trump's bluster about and nonsense about the 51st state is we might actually get more interprovincial trade across the board, including of electricity And Canada's in a place with, you know, as I said, just with the data centers alone, we need to bring a lot more generation online and to do that.

We don't want each province operating as a silo. They are are, they've got interties, but often those interties are underused. And in fact, you get North, south Interties between say Alberta and Montana more used than say an east west interties between Alberta and British Columbia. And now Mark Carney, who was the odds on favorite to be our next Prime minister at the end of Monday has set this barrier of dropping all it set this big, very audacious goal of dropping all barriers through inter provincial trade by Canada Day, July 1st this year.

And, and a direct consequence of this the reshaping of our alliance of the United States. 

[00:39:51] Amy Myers Jaffe: So, so lemme reframe that in a positive way. Um. In, in the following way. So we're having to look at that again across the United States because we have the same thing. We have these sort of Texas said, oh, we're not gonna trade with any other state.

And then they had this horrible blackout where people, you know, had no heat and no power. And then it was like, well, maybe, maybe that was a mistake. And then the federal government stepped in and, and provided some, you know, loan guarantees for new transmission. To connect. Texas and Ariz. It connects Texas, New Mexico and Arizona and, and to do some other creative things so that we would benefit kind of in the way that Canada's talking about doing at their own provincial level.

I understand how controversial this is gonna be to say this on a Canadian podcast. I. But, you know, I, I travel and, sometimes people from Europe will privately say, Hey, uh, we probably weren't organized and this really socially negative thing came out and we had to have meetings about it, and we raised our defense spending, or we did this or we did that.

And the overall outcome for the entire alliance is a good thing. So I'm not excusing the process, right? I'm not endorsing the process. I'm not weighing in on the process. But to the extent that we're gonna move into a world where digital is everything, where national security is gonna revolve around data and the protection of data and the electrification of all of our different.

Things, we're gonna have more electric transportation, we're gonna have more electricity in buildings. Right. To the extent that we are electrifying, even if you didn't believe in decarbonization, we're still electrifying a lot of things because we're going to automation, right? I mean, that's what I wrote about.

You could take it as a climate thing, but it's, we're really just basically going to automation, you know, that train's left the station. Try to get people to turn off all their devices not happening. Right. 

[00:41:57] Ed Whittingham: Or even these days, try to get them to stop using chat. GPT. 

[00:42:01] Amy Myers Jaffe: Yeah, a hundred percent. I just read a statistic about how many companies know about the unknown use of, uh, of the chat GPT type programs, and it's high.

So my, my point is that we do need to get organized and we do need to think about, how do we, how do we think about electricity trade in the Americas? We need to think about metals supply in the Americas. I mean, Chile and Argentina have absolutely stepped up to the plate. The United States has been sort of a catalyst for getting more hemispheric cooperation in metals, mining and processing, which doesn't really hit the paper too much.

Um, but. Trying to think more constructively about what do I need to do inside my own country that would then support what I would do inside the Americas. Um, you know, that's really important. And if you think about defense in a non-traditional way, right? And what do I mean by that? You know, you know, are, am I worried that someone is gonna bomb New York City and there're gonna be some ramifications for Montreal, or they're gonna bomb Vermont and there'll be ramifications for Vermont.

Are we really thinking about it that way? You know, maybe that's not the way to think about it. You know, maybe the way to think about it is, uh, what would happen if there was an attack on. Electricity infrastructure throughout North America or even just the United States, and how would that affect North America, right?

Or what would it look like if we had economic warfare as a part, as a outgrowth of some other kind of geopolitical dispute, and how do we protect our joint economies? From that vulnerability, what can we import, import from abroad, and what do we have to import in the Americas and what should we all be doing in terms of all these different resources?

I think it's beneficial to try to avoid conflict and do a lot of diplomacy and do all those things, but at the end of the day, we all have to sit down like some of your prime ministerial candidates are doing and talk about how we make ourselves most resilient. It's both most resilient on a national security basis.

But then you also wanna think about how you making yourself most resilient to climate change. 'cause it's a combination of both. 

[00:44:41] Ed Whittingham: And that's one of the interesting conversations. Uh, unfortunately we don't have time to unpack it fully today. You've done it a bit. But looking at those security vulnerabilities that are created by an increasingly AI dependent energy infrastructure, where are those vulnerabilities?

How they could be exploited in geopolitical conflicts? And ultimately, you know, this grand question of how AI enabled. Tech and, and energy tech in particular is going to contribute to the reshaping of, of traditional alliances and strategic partnerships that is already underway. And, you know, there's a Japanese proverb that, you know, to navigate the Harvard.

I'm gonna, I'm gonna. Paraphrase it badly, but to navigate the harbor, you need to know where the rocks are and you need to go and sort of drain the harbor once to discover where those rocks are. And what we're doing is, is draining that harbor and seeing where they are right now in a way that we wouldn't have otherwise had it not been for the recent disruption in chaos that we've seen.

Coming from, from, uh, you know, you're president for one. 

[00:45:41] Amy Myers Jaffe: So, and let me just again, try to say something positive out of what feels negative. The Europeans were not prepared. I. They had a policy and their policy was the Russians would never cut off our natural gas. That was their policy. And you might recall starting with Ronald Reagan and Trump 1.0, you know, there were a lot of presidents that flew around and said, this is dangerous.

You shouldn't be doing it. We're gonna punish you if you do Nord Stream two yak, yak, yak. And everybody was like, oh, how dare they speak to us like that. We're allies. You know, I hate to say it, but they were not prepared. 

[00:46:21] Ed Whittingham: So Amy, I remember distinctly, we talked about it as part of our World Economic Form committee in the mid 2010s, in the context of what had happened in with Crimea in 2014.

And we talked about the vulnerability at that time, 

[00:46:34] Amy Myers Jaffe: right? So, you know, to the extent that you have with your family uncomfortable conversations before there's any crisis. It means that the alliance is gonna be stronger because if you wait till there's a crisis, then it's harder politically for any leader to stand up and, and, and lean in.

Right. So the time to do it is now so that there isn't a crisis. Or if there is one, we're prepared. 

[00:47:02] Ed Whittingham: Yeah. I've heard countless people cite that, that, uh, that quote that I think is attributed to Churchill. Don't let a good crisis go to waste. And, and that's. That's what's happening now. I do. I do want a, a final thought from you if you had to bet.

Do you think what's happening now, the AI boom and the increased, uh, load projections from data centers? Ultimately, you and I work in clean energy. Is it going to help to accelerate the clean energy transition or ultimately, is it gonna be a drag on the clean energy transition? 

[00:47:37] Amy Myers Jaffe: Well, you know, uh, as you know, 'cause we've known each other for a long time, and I've always appreciated your friendship.

I think it's too early to conclude that it's gonna bail out fossil fuels, which is what people think, right? So maybe in the next year there was gonna be some coal plants in the United States that would've closed. And obviously there's some nuclear vendors that, you know, are suddenly like, ha, everybody's happy to see them.

And that wasn't true five years ago. Um, but what I would say is there are some superior solutions that are much more complex that are coming, and it's not black and white, and even the demand load thing is not black and white because the question is, if I were to really investigate how much I can save in energy demand through automation.

Through, um, you know, demand response programs through improved machinery that, that, you know, can actually do the ai. We say we have a breakthrough in quantum. Is that less energy needed? Because I can do the thing at, at a much bigger scale. We're having such rapid change. I mean, remember when the first chat GBT free thing came out and people like, no one's gonna use that.

I mean now everybody's using it. 

[00:49:02] Ed Whittingham: I did use it when it first came out to compose poems for Christmas cards. It came out late, I wanna say 2023. And I thought, oh, this is neat. This is a fun thing. But yeah, I can't see the utility beyond that, how shortsighted I was at the time. 

[00:49:16] Amy Myers Jaffe: No. And, and, and, and 'cause people had to figure out like, what would I use it for and how would it be useful?

And you know, there are things that it's doing, generally speaking. That I don't care for, like I don't care for the fact that there are corporations that are hounding me because they have some track record of what I bought. I find that really intrusive. But you know, you could also use it for medical research and all kinds of things that could be a positive thing.

So, uh, let's hope that it goes more in that direction. 

[00:49:52] Ed Whittingham: Amy Myers Jaffe, thank you very much for joining me on Energy versus Climate. It's been wonderful to have you back. We don't often have guests return, so you're one of a very select few. But, uh, yeah, this has been a rich conversation. Thank you.

[00:50:05] Amy Myers Jaffe: Wonderful to talk to you, ed. 

[00:50:07] Ed Whittingham: Thanks for listening to Energy Versus Climate. The show is created by David, Keith, Sara Hasting-Simon and me, Ed Whittingham, and produced by Amit Tandon. With help from Crystal Hickey Vinuki Arachchi and Haris Ahmed. Our title in show music is The Windup by Brian Lips. This season of Energy versus Climate is produced with support from the University of Calgary's, office of the Vice President Research and the University's global research initiative.

Further support comes from the Trottier Family Foundation, the North Family Foundation, the Palmer Family Foundation, and our generous listeners sign up for updates and exclusive webinar access. At Energy versus climate.com and review and rate us on your favorite podcast platform. This helps new listeners define the show.

Sarah's still on leave for now, and David and I both have some international travel coming up in May, so we won't be back with a new EVC show until late May. In the meantime, in mid-May we'll drop a show in our feed at Roger Thompson and I taped for our climate Book reviews podcast about Upton Sinclair's classic 1926 novel oil, See ya then.