The Outlook for Data Center Power Demand as AI Token Use Grows

To put in perspective what is AI doing from a power demand perspective, it's adding the power equivalent of the whole country of Japan, which is the number five power consuming country. So this is really significant.

The last time we sat down to talk about AI and power, the debate was whether the grid could handle it. That question has now been answered in basically the least comforting way possible: partly, unevenly, and expensively. Welcome back to AI Exchanges. I'm Alison Nathan, and I'm here together with George Lee, the co head of the Goldman Sachs Global Institute. Together, we're co hosting a series of episodes exploring the rise of AI and everything it could mean for companies, investors, and economies. George, great to see you again.

Great to be here.

So George, let's first set the table for people who have followed this series. When we first covered this topic, the shorthand was basically that AI would drive a step change in data center power demand after nearly two decades of essentially flat electricity load. But since then, demand forecasts have gone up again. Even as we've discussed many times, models have become more efficient. The binding constraint has migrated away from megawatts and towards what I think of as all the Ts. We have turbines, transformers, transmission, and tradespeople. So new constraints entering the picture. And th

I think one thing that kind of syncs with my expectations is the demand cycle continues. And what's fascinating is to watch, as you described, the supply chain get stretched all the way back from models, but to all of the physical affordances, really almost all the way back to the base elements. And so this is one of the most complex, intricate, and global supply chains in the world. It'd be fascinating to talk with our guests today about how that's playing out, where the real bottlenecks are, and whether we can navigate those bottlenecks and the political issues you described.

Yes. So we have brought in what we think of as exactly the right people to talk about this and help us untangle it all. Joining us again are my colleagues in Goldman Sachs Research, Brian Singer and Carly Davenport. Brian is the global head of GS Sustain, and he thinks about the innovation cycle and the sustainability trade offs of all of this. Carly is our America's Utility Team Senior Analyst. She puts the numbers on just how much power we're going to need and where it's all gonna come from. So Brian, Carly, welcome to the program.

Thanks for having us.

Thank you. Great to have you both.

Carly, let's start with you. You and your team recently raised your overall US power demand outlook. What prompted that change, and where does it leave us in terms of power demand?