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>So if everything about this AI boom fails what we'll be left with is a massive amount of abundant renewable energy Except that someone has to pay for it. AI

by baking 2y ago

>So if everything about this AI boom fails what we'll be left with is a massive amount of abundant renewable energy Except that someone has to pay for it. AI companies are only willing to pay for power purchase agreements, not capital expenses. Same with the $7T of chip fab. Invest your money in huge capital expenditures and our investors will pay you for it on an annual basis until they get tired of losing money.

toomuchtodo 2y ago
Power purchase agreements are what renewables developers use to obtain financing for construction. The contract is collateral. Worst case, the developer might need to be prepared to find a substitute offtaker for the power if a PPA with a gen AI offtaker goes bust (if brought up by whomever is underwriting the financing, if there are debt covenants, etc). I absolutely support AI companies signing as many PPAs for low carbon energy even if they implode in the future. The PV panels, wind turbines, and potentially stationary storage will already be deployed at that point. https://betterbuildingssolutioncenter.energy.gov/financing-navigator/option/power-purchase-agreement https://betterbuildingssolutioncenter.energy.gov/financing-n...
- baking 2y ago
  What if it is a 5 gigawatt data center in the middle of nowhere or if the power source is a nuclear reactor or three? Presumably, data centers are paying a premium that other customers aren't willing to pay.
  - gabrielhidasy 2y ago
    Hopefully we get a nuclear reactor or three
  - toomuchtodo 2y ago
    Hard to say with random "what ifs." If we're starting merchant nuclear reactors back up, because they have some life left in them and can be operated safely, I support such an operating model as it pushes high carbon energy out of the generation mix until there is more clean energy on the grid. Illinois provides subsidies to their nuclear reactors because they are low carbon [1], the federal government is subsidizing Diablo Canyon in California [2] and Palisades in Michigan [3]. Every coal fired generator in the US is more expensive to run than to replace with low carbon renewables except the one in Dry Fork, WY, [4] so subsidies are just arguments, not real economic signals. TLDR We're kicking the can until we can get more clean energy online, and that ramp rate continues to accelerate [5]. [1] https://www.cnbc.com/2021/11/20/illinois-nuclear-power-subsidy-of-694-million-imperfect-compromise.html https://www.cnbc.com/2021/11/20/illinois-nuclear-power-subsi... ("Why Illinois paid $694 million to keep nuclear plants open") [2] https://www.reuters.com/world/us/us-finalizes-11-billion-credits-california-nuclear-plant-2024-01-17/ https://www.reuters.com/world/us/us-finalizes-11-billion-cre... ("US finalizes $1.1 billion in credits for California nuclear plant") [3] https://news.ycombinator.com/item?id=41696884 https://news.ycombinator.com/item?id=41696884 (HN: MI nuclear plant finalizes fed loan for first reactor restart in US history") [4] https://news.ycombinator.com/item?id=37601970 https://news.ycombinator.com/item?id=37601970 (citations) [5] https://news.ycombinator.com/item?id=41602799 https://news.ycombinator.com/item?id=41602799 (citations)
    - baking 2y ago
      I think you are missing my point. Microsoft signed a 20-year agreement with Constellation to restart TMI Unit 1. Do you think Constellation would make the same agreement with Open AI? The risk is completely different.
      - toomuchtodo 2y ago
        No, the point is taken, I think you’re underestimating FOMO and the hype cycle. If a counterparty is just a bit too rational, move on, lots of other potentials. Markets are sentiment driven. When there is potentially irrational exuberance, leverage it.

by baking 2y ago

toomuchtodo 2y ago

Power purchase agreements are what renewables developers use to obtain financing for construction. The contract is collateral. Worst case, the developer might need to be prepared to find a substitute offtaker for the power if a PPA with a gen AI offtaker goes bust (if brought up by whomever is underwriting the financing, if there are debt covenants, etc). I absolutely support AI companies signing as many PPAs for low carbon energy even if they implode in the future. The PV panels, wind turbines, and potentially stationary storage will already be deployed at that point. https://betterbuildingssolutioncenter.energy.gov/financing-navigator/option/power-purchase-agreement https://betterbuildingssolutioncenter.energy.gov/financing-n...

baking 2y ago
What if it is a 5 gigawatt data center in the middle of nowhere or if the power source is a nuclear reactor or three? Presumably, data centers are paying a premium that other customers aren't willing to pay.
- gabrielhidasy 2y ago
  Hopefully we get a nuclear reactor or three
- toomuchtodo 2y ago
  Hard to say with random "what ifs." If we're starting merchant nuclear reactors back up, because they have some life left in them and can be operated safely, I support such an operating model as it pushes high carbon energy out of the generation mix until there is more clean energy on the grid. Illinois provides subsidies to their nuclear reactors because they are low carbon [1], the federal government is subsidizing Diablo Canyon in California [2] and Palisades in Michigan [3]. Every coal fired generator in the US is more expensive to run than to replace with low carbon renewables except the one in Dry Fork, WY, [4] so subsidies are just arguments, not real economic signals. TLDR We're kicking the can until we can get more clean energy online, and that ramp rate continues to accelerate [5]. [1] https://www.cnbc.com/2021/11/20/illinois-nuclear-power-subsidy-of-694-million-imperfect-compromise.html https://www.cnbc.com/2021/11/20/illinois-nuclear-power-subsi... ("Why Illinois paid $694 million to keep nuclear plants open") [2] https://www.reuters.com/world/us/us-finalizes-11-billion-credits-california-nuclear-plant-2024-01-17/ https://www.reuters.com/world/us/us-finalizes-11-billion-cre... ("US finalizes $1.1 billion in credits for California nuclear plant") [3] https://news.ycombinator.com/item?id=41696884 https://news.ycombinator.com/item?id=41696884 (HN: MI nuclear plant finalizes fed loan for first reactor restart in US history") [4] https://news.ycombinator.com/item?id=37601970 https://news.ycombinator.com/item?id=37601970 (citations) [5] https://news.ycombinator.com/item?id=41602799 https://news.ycombinator.com/item?id=41602799 (citations)
  - baking 2y ago
    I think you are missing my point. Microsoft signed a 20-year agreement with Constellation to restart TMI Unit 1. Do you think Constellation would make the same agreement with Open AI? The risk is completely different.
    - toomuchtodo 2y ago
      No, the point is taken, I think you’re underestimating FOMO and the hype cycle. If a counterparty is just a bit too rational, move on, lots of other potentials. Markets are sentiment driven. When there is potentially irrational exuberance, leverage it.