More power

The U.S. and China are competing in several dimensions. One is the global hegemon, and the other wants to be the leader if and when there is a new world order. One of the key competitions has to do with AI, and within AI, with building and maintaining the necessary energy infrastructure to feed the data centers to train and run the models. In the chart below, there is little doubt about who’s leading the energy competition so far. And perhaps the U.S. is making a strategic mistake if they pass the OBBB in its current form, because it would phase out the investment and production tax credits (ITC and PTC) for any project that is placed in service after December 31, 2027. The U.S. needs to triple its energy production in 5 years and revamp the electrical grid, which is obsolete, and will collapse if demand rises a merely 10%. What’s the cost of competing with China on energy? To be competitive the U.S. will need to use nuclear, solar, wind, Natural gas and hydropower. And it will need to invest 50-100Bn annually for the next 10 years just to catch up. The private sector can contribute a substantial percentage of that, but it may not be enough if the grid is antiquated and depends on the federal government. And the federal government is shooting itself in the foot with a bill that will increase the deficit and the debt before taking into account the energy race. We’re going to need a more radical solution.

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