Fwd: China’s AI advantage
Loretta Lohman
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The ability to win the artificial intelligence race hinges on access to energy. And on that front, China is better positioned than the US. Today’s newsletter looks at why Beijing’s rapid energy infrastructure buildout is also its secret AI superpower. Plus, Fidelity doesn’t see adaptation as a sure bet for investors. Did someone forward you this newsletter? Subscribe to Green Daily for free reads on the role renewable energy is playing in the global struggle for AI dominance. The electricity gapBy Emily Forgash and Lili Pike New data on China’s relentless energy installations underscore warnings from Elon Musk and Jensen Huang that the nation’s world-beating power network will deliver a major advantage over the US in the race to dominate artificial intelligence. Since 2021, China has added more power capacity across all energy technologies than the US has in its history, including 543 gigawatts last year, according to figures released late last month by the country’s National Energy Administration.  China will add more than 3.4 terawatts of electricity generation capacity over the next five years, almost six times as much as the US, BloombergNEF projects under its base-case Economic Transition Scenario. That influx would give the No. 2 economy greater ability to accommodate rising power demand from data centers. “The limiting factor for AI deployment is fundamentally electrical power,” Musk told BlackRock Inc. Chief Executive Officer Larry Fink in an interview at the World Economic Forum on Jan. 22. “Very soon, maybe even later this year we’ll be producing more chips than we can turn on — except for China,” said Tesla Inc. CEO Musk, whose xAI is building US data centers. “China’s growth in electricity is tremendous.” Musk’s comments echo similar sentiments from Nvidia Corp.’s CEO Huang, who has also identified access to electricity as a potential differentiator between the US and China. AI competitiveness can be thought of as a cake composed of five layers: energy, chips, infrastructure, models and applications, Huang told a December event hosted by the Center for Strategic and International Studies. “At the lowest level — energy — China has twice the amount of energy we have as a nation,” he said. In the US, data centers will account for 38% of the growth in electricity demand between 2024 and 2030, though just 6% in China, according to BNEF projections. Data centers will command almost 7% of total US power demand by 2030, compared to 2% in China.  China, where electricity consumption hit a record last year, is continuing to rapidly add new power capacity with huge deployments of renewable sources like solar and wind alongside more coal, nuclear and gas facilities. Solar generating capacity is on track to surpass coal in China for the first time this year, though newly added renewables have lower utilization rates than fossil fuel assets. Growth in generation capacity is proving slower in the US, where electricity demand has recently begun surging after roughly two decades of flat growth through the early 2020s. The anticipated requirements from AI have triggered a rush of development of new gas-fired capacity, though US power plants can take years to come online as a result of more onerous regulation and supply chain bottlenecks. President Donald Trump’s opposition to renewables also means clean energy projects have been subject to cancellation or delays. “The federal government is essentially shooting ourselves in the foot by not allowing a more straightforward and robust uptake of” renewables to meet data center demand, said Michael Davidson, an associate professor at UC San Diego who focuses on US and Chinese energy policy. Read the full story to see what else will determine the winner in the battle for AI supremacy and subscribe to Bloomberg for unlimited access to all stories.
Long queue7 The number of years data centers are waiting to hook up to the grid managed by Dominion Energy Inc., the utility that services areas including the heart of Data Center Alley. Power hungry“Take your house and increase that by 10,000. That is the difference between your house and a data center.” Hasala Dharmawardena Senior member, Institute of Electrical and Electronics Engineers Investors bewareAs extreme weather becomes more frequent, investors are examining how much money can realistically be made from climate adaptation. Jenn-Hui Tan, chief sustainability officer at Fidelity International, which oversees about $1.1 trillion, said the investment case for adapting to climate change is far less straightforward than for reducing emissions. Mitigation has produced clear growth opportunities such as renewable energy and electric vehicles, while adaptation — focused on protecting assets from damage caused by wildfires, floods and droughts — is harder to monetize.  Uprooted
trees around a boarding school and mosque following
floods in Indonesia.
Photographer:
Aditya Aji/AFP
The urgency is increasing as heat waves, fires and floods batter cities from Lisbon to Los Angeles and progress on decarbonization stalls. But adaptation spending is largely about resilience rather than expansion, Tan said. “The nature of adaptation spend is essentially to be able to continue to do what you do today,” he said in an interview. “It’s resilience spending.” That doesn’t mean there are no options, Tan said, pointing to sectors such as air conditioning, water management and irrigation. But “the return on investment of resilience or adaptation is harder to identify than for mitigation,” he said. Others are more optimistic. JPMorgan Chase & Co. has said companies that are alert to physical risks can deliver outsize returns, while analysts at Jefferies Financial Group Inc. have said climate-adaptation strategies may ultimately outperform investments focused solely on emissions reduction. “When we talk about resilience and adaptation, what we’re thinking about is how are the companies we invest in becoming more resilient to these changes,” he said. Read the full story. This week’s Zero A woman
walks under the transmission lines of a Husk Power
mini-grid in Rukubi, Nasarawa state, Nigeria.
Source: Husk
Power
Major economies around the world are grappling with electricity grids under stress from equipment bottlenecks and workforce shortages. What can be done to solve it? This week on Zero, Akshat Rathi talks with Manoj Sinha, CEO of Husk Power Systems, about distributed energy resources and their potential to bring electricity to where it is needed most — from energy-poor regions in the Global South, to energy-hungry data centres in rich countries. Listen now, and subscribe on Apple, Spotify or YouTube to get new episodes of Zero every Thursday. More from GreenChina criticized the EU’s in-depth probe into subsidies for Chinese wind power companies, calling the move protectionist and vowing to take action to protect the country’s interests. Berkshire Hathaway’s PacifiCorp is asking an appeals court to throw out a 2023 jury verdict in a wildfire class-action case that has exposed the company to billions of dollars in losses. Federal enforcement of polluters slumped in the first year of the second Trump administration, a new analysis of government data by a nonprofit watchdog group has found. Photo finish A power
station in front of the skyline of downtown Dallas
during a winter storm on Jan. 25.
Bloomberg
Last month’s sprawling winter storm was one of the first multi-grid tests in the US for big batteries — and they passed. Texas in particular benefited from energy storage, which helped cushion the state’s grid during the storm. “The batteries were the savior this time,” said Barbara Clemenhagen, executive director of the Gulf Coast Power Association and energy consultant. More from Bloomberg
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