Yahoo Finance From Enbridge to Cameco: Canadian CEOs eye AI-driven electricity boom
Warnings from Tesla (TSLA) boss Elon Musk, Amazon (AMZN) CEO Andy Jassy, and Sam Altman of ChatGPT-maker OpenAI appear to have reached the boardrooms of Canada’s energy sector. From nuclear, to hydrogen, to natural gas, executives are talking up opportunities to power the physical infrastructure behind artificial intelligence (AI).
Data centres could draw as much electricity as Japan by 2026, more than double their demand today, according to the International Energy Agency (IEA). It will be a test for power grids already facing rising demand from electric and plug-in hybrid vehicles.
Musk predicted in March that electricity will be a new industrial pain point as the semiconductor chip shortage that’s roiled the technology and manufacturing worlds since the COVID-19 pandemic eases.
“The chip shortage may be behind us, but AI and EVs are expanding at such a rapacious rate that the world will face supply crunches in electricity and transformers next year,” the Tesla executive told an audience at the Bosch ConnectedWorld event in Berlin. “The next shortage will be electricity.”
Amazon’s Jassy says using renewable energy sources to meet this new demand will be essential, given the environmental pressure on major corporations.
“We're going to have the dual challenge as a group to find a lot more energy to satisfy what people want to do, and what we can get done for society with generative AI,” he told Fortune during this year’s World Economic Forum in Davos. “We've got to do it in a renewable way, in a carbon-neutral or zero way. It can’t be going back to coal.”
Toronto-based Brookfield Renewable Partners (BEP-UN.TO) recently inked a major deal with Microsoft (MSFT) said by the company to be almost eight times bigger than the largest single corporate power purchase agreement ever announced.
Large tech companies are really our kind of customersMatthew Akman, Enbridge's executive vice president of corporate strategy & president of renewable power
Brookfield says the plan to develop over 10.5 gigawatts of new renewable energy capacity for the U.S. tech giant in America and Europe will focus on wind and solar, as well as other “impactful carbon-free energy generation technologies.”
According to BloombergNEF, if all this development was hypothetically put into U.S. solar farms, the estimated building cost would be more than US$11.5 billion.
“[Brookfield's] management sees far more demand for clean power than there are available projects, and expects this dynamic to play out over the course of years,” RBC Capital Markets analyst Nelson Ng wrote in a May 5 note to clients.
Speaking on Enbridge’s (ENB.TO) May 10 post-earnings conference call, CEO Greg Ebel referred to expected demand from data centres and generative AI as “the topic du jour.”
“The build-out of data centres and generative AI is forecast to require a material increase in power generation,” he said.
Ebel predicts this new power generation will use a combination of natural gas and renewables. The Calgary-based pipeline company transports about 20 per cent of all natural gas consumed in the U.S., and has a significant renewable energy and power generation business.
“Demand for renewables is already very strong, and I think the data centre stuff just enhances that,” Matthew Ackman, a senior Enbridge executive added on the call. “Large tech companies are really our kind of customers, and I think we're their kind of developer.”
Vancouver-based fuel cell producer Ballard Power Systems (BLDP.TO) is best known for hydrogen buses, trucks, and trains. However, CEO Randy MacEwen sees an eventual role for the company’s stationary power segment to meet demand from energy-hungry data centres.
Ballard recently announced plans to build a fuel cell “gigafactory” in Texas funded in part by U.S. federal tax credits. America is home to about one-third of the world’s roughly 8,000 data centres, according to the IEA.
“The number one challenge the data centre operators have, particularly the hyper-scalers, is the access to green energy,” MacEwen said on Ballard’s May 7 earnings call. “This is going to be a market where we see a lot of lumpiness.”
He says he expects developments in 2024 positioning Ballard to “move forward in that market” in 2025 and 2026.
Meanwhile, the CEO of Saskatchewan-based uranium miner Cameco (CCO.TO) recently called nuclear power a “clear winner” when it comes to electrifying a potential AI boom.
“I recently read that using generative AI to provide search results in the same way we use Google requires a ten-fold increase in power requirements, ten times,” Tim Gitzel said on an April 30 conference call with analysts.
“Clean and secure electrons are on the critical path with AI development, putting nuclear and Cameco on the critical path to the digital revolution, and strategic reindustrialization.”
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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