Wall Street’s Risky $50 Billion Energy Gamble

By Douglas McIntyre  •  October 31, 2024
Sam Forson Pexels

Several financial services firms have decided to invest $50 billion in AI and the electricity that will power it in the mid-term future. Suppose the alternative energy companies the funds support are slow to come online. In that case, the environment will face more use of fossil fuels to provide energy for a rapidly growing need for AI server farms. Their gamble could go wrong.

*Alternative Energy Challenges

*Solar Energy And Farming

According to The Wall Street Journal, “KKR and Energy Capital Partners have agreed to invest a combined $50 billion in data-center and power-generation projects to support the development of artificial intelligence.” Alphabet, Microsoft, and several large private AI companies are in the midst of a widespread search for new sources of what could be a battle over electricity use across America. 

Slow Solar And Wind

For the projects to work, there will have to be rapid growth in the use of solar, wind, and a new generation of nuclear reactors. Wind and solar are proven technologies but have been slower to get online than owners expected. Part of this is access to financing, both from the government and private sectors. Technology for Small Modular Reactors (SMRs) is largely untested in the real world and could take years to get online. 

If things go as planned, the return on the $50 billion could be significant. Large tech companies will pay premiums over normal electricity prices because they are desperate to become leaders in what could be the largest tech creation ever.

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