① The huge energy demand from artificial intelligence and data centers has brought huge upside to the natural gas industry; ② Wells Fargo's report indicates that US electricity demand is expected to grow 20% by 2030; ③ industry figures point out that renewable energy alone may not meet electricity demand, and natural gas will be needed to supplement it at that time.
Financial Services Association, May 6 (Editor: Zhou Ziyi) With artificial intelligence driving a surge in electricity consumption, renewable energy alone may be difficult to meet society's electricity needs in the future. Currently, gas producers seem to be seeing a sharp rise in demand for natural gas over the next 10 years.
Due to multiple factors such as the rise of artificial intelligence, the expansion of the global semiconductor and battery manufacturing industry, and automobile electrification, energy is becoming more and more expensive, and power companies are also thinking about ways to ensure future energy supply.
Surge in electricity consumption
According to an analysis report released by Wells Fargo last month, after a 10-year power growth platform period, electricity demand in the US is expected to grow 20% by 2030.
According to Wells Fargo, AI data centers alone are expected to increase electricity demand by about 323 terawatt-hours (1 terawatt-hour = 1 billion kilowatt-hours) in the US by 2030. By comparison, New York City currently uses 48 terawatt-hours of electricity per year.
Wall Street Bank Goldman Sachs predicts that data centers will account for 8% of the total electricity consumption in the US by 2030.
Natural gas will play a key role
The surge in power demand in data centers has undoubtedly brought challenges to big tech companies.
Companies including Amazon, Google, Microsoft, and Meta have promised to power their data centers with renewable energy to reduce carbon emissions.
However, according to an April report from consulting firm Rystad Energy, weather-dependent energy sources such as solar and wind energy alone may not be sufficient to meet the electricity load of these companies.
According to Rystad, the surging power load will require an energy source to fill the gap and meet the surging demand when renewable energy generation is insufficient. The industry believes natural gas will be the first choice.
Richard Kinder, executive chairman of Kinder Morgan (Kinder Morgan), the largest gas pipeline operator in the US, said, “Demand trends indicate a fatal flaw in emphasizing renewable energy as the only source of electricity in terms of meeting the actual needs of the market.
Kinder notes, “I believe they (big tech companies) are beginning to recognize the role gas and nuclear energy must play.”
High growth rate
According to a report released by Goldman Sachs in April this year, natural gas is expected to account for 60% of the increase to meet the increase in electricity demand brought about by artificial intelligence and data centers, while renewable energy will account for the remaining 40%.
According to Wells Fargo, demand for natural gas could increase by 10 billion cubic feet per day by 2030. This would be a 28% increase over the current daily 35 billion cubic feet of electricity consumption in the US, accounting for 10% of the total daily consumption of 100 billion cubic feet of natural gas in the US.
Roger Read, one of the authors of the Wells Fargo analysis report, stated, “This is why people are increasingly optimistic about natural gas. That's a pretty high growth rate for a commodity.”