According to a new report from Goldman Sachs, Big Tech companies are investing megabucks in generative AI with little to show for it.
What's happening?
Data Centre Dynamics reported on the research, saying that the investment banking firm predicts that around $1 trillion will be spent in the coming years on data centers, semiconductors, grid upgrades, and other AI-related expenditures.
"So, the crucial question is: What $1 trillion problem will AI solve? Replacing low-wage jobs with tremendously costly technology is basically the polar opposite of the prior technology transitions I've witnessed in my 30 years of closely following the tech industry," Goldman Sachs head of global equity research Jim Covello said, per the publication.
Why is this research important?
Countries such as the United States are grappling with grid constraints because of the massive amount of energy required by AI, including data centers needed to power the technology.
"After stagnating over the last decade, we expect U.S. electricity demand to rise at a 2.4% compound annual growth rate from 2022-2030, with data centers accounting for roughly 90 [basis points, or 0.9%,] of that growth," said Carly Davenport, senior U.S. utilities equity research analyst, according to Data Centre Dynamics.
Meanwhile, many countries are already battling grid constraints, thanks to the effects of an overheating planet.
For instance, this summer, Indian engineers warned of possible prolonged power outages in parts of the country as air conditioner use soared amid searing temperatures. Plus, a new report warns of the disastrous effects colder weather could have on America's power grid in the coming years. Power outages in the cold of winter can have disastrous effects too — in 2021, nearly 250 people died in Texas when the state's power grid failed during a winter storm.
What's being done about grid infrastructure?
Governments and private companies are looking into solutions to strengthen grid systems across the globe. For instance, one company is leaning into Texas' massive solar power adoption by investing in three grid battery installations to store that power.
Plus, the U.S. Department of Energy recently announced a $2.2 billion investment to expand and strengthen the country's power grid. It will support eight projects in 18 states and aims to protect the grid against extreme weather, reduce costs for communities, and boost capacity to meet growing energy demands.
Adopting more renewable energy is one way to make the power grid more reliable, according to the U.S. Joint Economic Committee. You can get on board by signing up for community solar or even installing your own solar panels, which will also help you save money on your energy bills and make your home more energy-independent.
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