00:00Of course, while we've been talking about the debate over whether AI development needs to slow down,
00:05there is, as Mitch was mentioning, this other AI battle brewing in America
00:09over the huge data centres needed to keep the technology moving forward.
00:14And that's becoming an election issue too.
00:16Sergey Netesin is a professor of operations, information and decisions
00:20at the Wharton School at the University of Pennsylvania.
00:24Great to have you on the programme.
00:25So, look, opposition to data centre development is growing faster across America.
00:31What is driving that?
00:34Well, thank you for having me, first of all.
00:38And what's driving is that AI used to be a software story.
00:42Now it is becoming an electricity infrastructure story.
00:46And what the public is seeing is that electricity prices have increased about 32% in the last five years,
00:53which is a significant increase which the public is feeling.
00:57But the thing is, what I find in my research is that very little of it should be attributed to
01:03data centres on average.
01:05In some areas, certainly data centres are part of the story.
01:09But in most areas in the United States, there is just no sensible increase from adding AI data centres.
01:16Except that that is what is sending people out to protest against building these data centres.
01:22People feel it's affecting their cost of living.
01:25Could this actually change the way people vote?
01:28Is it becoming a real election issue or just noise?
01:33Unfortunately, it can become a real issue because AI data centres kind of is an easy scapegoat.
01:40You see a lot of them popping up and it's easy to blame them.
01:44But the reality is the most of electricity price increases are not because of that.
01:49It's because of ageing infrastructures that needs to be repaired.
01:52It's because of climate change and more and more extreme events where infrastructure needs to be fixed.
01:59It's also because of higher borrowing costs.
02:01So to rebuild all of this, you need to borrow money and it's more expensive now.
02:05Now, AI data centres in kind of a worst, some of the worst case scenarios might be contributing like 10
02:12% of this increase,
02:14maybe a little bit more in extreme, extreme cases like Virginia.
02:19But overall, there are even cases where adding AI data centres to the grid decreases prices for consumers.
02:27And unfortunately, public does not understand that.
02:29Yeah, I mean, look, hundreds of billions of dollars have already been committed to building these data centres.
02:35And we're seeing this political opposition, this bid is being debated.
02:41Can that actually stop something this side and slow down America's data centre push?
02:49It certainly can, unfortunately.
02:53And we might be seeing locally prohibitions against data centres.
03:00And the right question is not whether we should or should not build AI data centres.
03:06We should because there's going to be huge benefits to the economy.
03:09AI data centres also create jobs locally.
03:12There are construction jobs, you know, refrigeration jobs, and all kinds of other jobs being created.
03:20But unfortunately, a lot of these benefits from AI data centres also accrue to kind of the economy more widely.
03:29And all consumers think is increasing electricity bill, and they're blaming AI data centres that they see nearby for it.
03:38And in most places in the United States, you can easily add AI data centres to the grid without increase
03:45in tariffs.
03:46And there are ways to control this as well.
03:49You can control separately tariffs for consumers and tariffs for industrial consumers.
03:55You can increase industrial tariffs and decrease tariffs for consumers.
03:59So all of that is possible.
04:00We'll have to see what ends up happening.
04:02We'll have to leave it there, I'm afraid.
04:04But thank you so much, Sergei Netasin from the University of Pennsylvania.
Comments