Andrew C Wang's Blog

Optimism for Surging Electricity Production

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AI has caused a massive electricity bill fuss. Data centers have been sharing the electricity cost climb, making end home consumers pay for the extraordinary additional demand. This is good, long-term, electricity market wise as this increase in demand, and thus cost, incentivizes more electricity producers to build more. However, today, 60% of electricity is still produced by natural gas, and Trump recently negotiated to pay a German firm $1.3b to not install more renewable energy.

It also demonstrates we’re entering a more productive age of society. AI, our industrial machinery, and our myriad of home products like air conditions are so electricity hungry, but all of these technologies continually improve our lives. Whether through direct contribution or productivity acceleration that trickles down to end consumer prices, our world’s increasing need for electricity, lowering prices of electricity, and adoption of more technology using this electricity continues improving humanity. We should be celebrating the continual innovation of society as it proves how much more problems that humanity can continually solve.

With data centers causing electricity costs to spike, I feel the necessity to point out that, as we continue building our more electricity, we should also be moving into electric vehicles. At some point, the skyrocketing demand and electricity means electric vehicles prices should plummet. The Iran War has shown that energy independence is vital; oil in vehicles is just a form of energy usage to make us productive in mobility. Generating our own electricity for electric vehicles would ensure the Middle East no longer affects American prices. It also gives the benefit of avoiding most future Middle East entanglements based on the drama of oil.

I’m an advocate in stopping climate change, but I also believe we shouldn’t totally tear down our oil industry. Certain transportation vehicles like massive CAT trucks probably still need gasoline. Many products still need oil like solar panel production or plastic for medical equipment. Oil is important, but the huge need for it should be eclipsed by the cheapness of renewables and oil’s negative externality regarding climate change. I’m also advocating for the reduction of natural gas (and needless to say coal) for electricity. Renewables will continually get cheaper. Though baseline electricity is a concern which fossil fuels cover, I’d instead advocate for alternative baseline electricity like nuclear and new sodium battery tech to store renewable energy. It’s plausible that renewable energy production, current battery technology, and the additional powerlines needed to send produced electricity might cost more than natural gas, but natural gas had the same phase of needing high upfront capital to cater to this new source of electricity, though to a lesser degree of course. Renewable energy prices are only continuing to drop, though; we should predict the future and jump on the bandwagon. I also appreciate gas stoves in restaurants e.g. for Wok Hei flavor in Chinese food or restaurants being low margin and need faster cook times through gas stoves. The complete destruction of these industries is nonsensical and likely political fodder from both sides of the political aisle.

Electricity is just a form of energy, and cheaper electricity enable innovations in products that increase productivity. Cars mostly being gas powered should be converted to electric powered as we continually surge in electricity supply with electricity production’s falling prices. We should continually strive for greater electricity production, and we can do that through renewables.