The Wizard of Oz” opened in theaters on Aug. 25, 1939. It was first broadcast on network television in 1956 and became an annual event in 1959 due to its impressive success. The special broadcast topped the charts with a Nielsen rating of 36.5 and an audience share of 58%, which is on par with Super Bowl viewership these days.
Many of you have watched it as well, and have noticed my paraphrasing of the famous line, “Lions and tigers and bears — oh my!” Dorothy, the Tin Man and the Scarecrow were walking through a dark forest, heard something rustling in the bushes and got scared of what it might be. They conjured up potential wild animals to fear: “Lions and tigers and bears — oh my!”
My family watched it every year, and I was obviously impacted by it. I use phrases from and make references to this movie often in my daily conversations. For example, if something strange is going on, I am likely to say, “Toto, I’ve got a feeling we’re not in Kansas anymore.” When I come home from a business trip, I will burst in the door and shout, “There’s no place like home.” If I make a stupid mistake, I am likely to start singing like the Scarecrow: “If I Only Had a Brain.” If someone tells me something that sounds crazy or impossible, I am likely to reply, “Well, let me just click my heels three times and say what I want to happen.”
This is exactly what I want to do when I think about the craziness that surrounds the nation’s energy policy. I want to click my heels together and say, “There is no place like 1990.”
Why 1990? It could be that I was 22 years old and full of optimism and excitement about the future. I was not yet fully exposed to the real world that also contains agendas, corruption and a host of other negativities that can add a slight hint of cynicism, a smidgen of skepticism with a touch of jadedness, to the salt-and-pepper gray hair of my 50s. But it is really because electric load growth was booming in America. And according to the National Bureau of Economic Research, the 1990s saw one of the longest economic expansions in U.S history. Utilities were building resources that made the most sense to fuel this growth. Life was good; it made sense.
We face remarkably similar conditions today, but things are not exactly making sense. We are seeing substantial growth in electrical load for the first time in 20 years, which represents an opportunity for America and for Arkansas. However, we are attempting to serve that electrical load with a vastly different national energy policy, resulting in a clash of two national objectives:
1. Economic Growth, and 2. Decarbonization. I call this the Carbon Conundrum.
Some electrical load growth is coming from the continuing increase in electrical vehicle (EV) sales and crypto miners coming to America, however, the main increase is due to a resurgence of American manufacturing, the surge in data centers and the emergence of Artificial Intelligence (AI). In 2020, data centers in the U.S. consumed about 200 TWh — yes, that is 200 trillion-watt hours — of electricity. In 2023, that number rose to 400 TWh, and it’s predicted to continue increasing to over 1,000 TWh by 2030 and account for 9% of all U.S. electric power usage by 2030.
Why so much increased power usage? According to the Electric Power Research Institute (EPRI), a traditional Google search uses about 0.3 watt-hours (Wh), while a query using ChatGPT, the chatbot developed by OpenAI, requires about 2.9 Wh, which is 10 times more power consumption. Most people think that every Google search or ChatGPT query is free; they do not account for the computing that is going on inside a large data center consuming electricity. Google has a commitment to achieve net-zero emissions by 2030, yet in their latest environmental report, carbon emissions have increased 48% since 2019 due to increased electrical usage.
Some would argue that this is exactly why more renewable energy is needed, and they would be a little bit right. However, intermittent renewable resources provide energy about 20% to 40% of the time, and data centers require power 99.9999% of the time. They require very stable and reliable power and run at full power all the time. Using intermittent renewable energy to solely power a data center is like bringing a fire extinguisher to a four-alarm fire. This is what I call the Carbon Conundrum.
America is poised to have true innovation and growth that will require large increases in electric generation. However, Environmental Protection Agency (EPA) rules and regulations and a singular focus by our federal government on decarbonizing the electric grid are colliding with that innovation and growth. Goldman Sachs estimates that about 47 GWs (billion watts) of new generation is needed to keep up with predicted load growth from data centers and AI alone. For reference, a GW will power more than 850,000 homes. However, it is at this exact moment in time, when the demand for electricity is surging, that we are closing coal plants to comply with EPA regulations, and closing nuclear plants due to age, with nearly all subsidies and support going to build wind and solar generation. At the same time, the EPA is making it harder, if not impossible, to build new large, efficient natural gas plants. How do you solve the conundrum between the competing goals of economic growth and innovation versus decarbonization?
Nuclear power is the only form of energy that is carbon-free that also has the energy density needed to power energy-thirsty data centers and AI. However, the risks of building a nuclear plant in 2024 are too high for nearly all companies to undertake without shifts in policy at the federal level. National energy policy that stops the shutdown of existing baseload power plants with decades of remaining useful life and that shifts focus to adding a balance of new resources — including advanced nuclear plants with the capability of powering our economy while also helping us to reduce carbon emissions at a reasonable rate — is a much more common-sense approach.
I know that we are all being told, “Pay no attention to the man behind the curtain.” Just listen to the Great and Powerful Oz, relentlessly fight climate change, and do not worry about much else. But I suspect that if we pulled back the curtain, just like Dorothy’s dog, Toto, we would find a very good man but a very bad wizard giving out diplomas and medals.