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Last month, corporate giant Amazon celebrated its twentieth birthday in Ireland. It must have been a joyful moment. Finally, Amazon, like other tech giants, has invested heavily within the country over the past twenty years, partly on account of its low tax system, which has enabled strong growth.
But in point of fact, these birthday celebrations had a sour aftertaste. One reason is that European courts ruled last month that the 13 billion euros in tax breaks given to Apple were illegal. On a recent visit, I used to be told that local business leaders fear this might hurt future investment.
Another, more immediate spoiler is energy. Amazon Web Services is currently investing €30 billion in Europe amid a boom in artificial intelligence, in accordance with Neil Morris, its Irish head. But none of that gold goes to Ireland because Amazon officials worry about future energy shortages. In fact, there are reports that the corporate has already redirected some cloud activities for that reason.
And although the Irish government has promised to expand the grid primarily through wind farms, this shouldn’t be happening quickly enough to satisfy demand. The water infrastructure also creaks. Yes, you read that right: a notoriously wet and windy country is struggling to take care of hydro and wind power technology.
There are at the least 4 sobering lessons here. First, this saga shows that our popular discourse about technological innovation is proscribed at best and delusional at worst. More specifically, in modern culture we are inclined to talk in regards to the Internet and AI as in the event that they were some completely incorporeal thing (like a “cloud”).
As a result, politicians and voters often overlook the inglorious physical infrastructure that makes this “thing” work, resembling data centers, power lines, and submarine cables. But this often-ignored hardware is important to the functioning of our modern digital economy and we urgently need to offer it more respect and a spotlight.
Secondly, we must bear in mind that this infrastructure can be coming under increasing pressure. In recent years, data center energy consumption has been relatively stable as increasing Internet usage is offset by increasing energy efficiency. But that’s now changing quickly: AI queries use around 10 times more energy than existing engines like google. According to the International Energy Agency, the electricity consumption of information centers will at the least double by 2026 – and within the USA they’re expected to eat nine percent of all electricity by 2030. In Ireland, consumption has already exploded to over a fifth of the electricity grid – greater than households.
Third, the hassle by firms and governments to work out how — or if — they’ll get that extra power has brought an unexpected boon: technology has grow to be a key driver of the energy transition.
Yes, increasing electricity consumption increases emissions. But firms like Google, Microsoft and Apple are investing heavily in hydro, wind and solar energy in addition to battery innovations. Microsoft even recently announced an agreement with utility Constellation to speculate $1.6 billion to restart the Three Mile Island nuclear power plant in Pennsylvania to satisfy AI power needs. Constellation's market cap has since risen to over $80 billion as investors expect more such deals.
Meanwhile, OpenAI's Sam Altman and Microsoft co-founder Bill Gates extol the fun of small modular reactors. She and others within the tech sector hope such moves will ultimately ease the energy shortage, especially if future versions of AI use less energy. If so, current fears about power supply could prove unsuitable – just as predictions of a world famine were dashed by the US Green Revolution of the Nineteen Sixties. The technology itself can solve technical problems – at the least they hope so.
However, the fourth lesson is that such an revolutionary energy solution couldn’t work without common government policy. Unfortunately, that is briefly supply. Finally, you would like planning permission to construct data centers, which frequently means government intervention. Just have a look at Angela Rayner, Britain's deputy prime minister, wading into a neighborhood dispute in Abbots Langley in Hertfordshire, where locals wish to block recent digital investment.
Creating interconnected power grids also requires government commitment. For example, a significant obstacle to renewable energy adoption within the United States is that it’s scandalously difficult to acquire the crucial permits to construct transmission lines to attach renewable energy sources within the American heartland with energy-hungry places like California.
And as energy shortages worsen, we can even need the federal government to choose the longer term distribution of scarce electricity resources, addressing issues resembling whether households must be given priority over businesses if the grid collapses, and whether the state or large Technology firms should finance innovation.
Libertarians – and lots of techies – might argue that market forces (i.e. prices) should determine the answers. But this vision is politically toxic, as Irish leaders know only too well. So prepare for energy battles within the industrialized world. It's not only the existential future risks of AI that we must be anxious about now.
