Running on Empty
Written by Paul Siluch
October 9th, 2024
The movie “2002 A Space Odyssey” began with an ape using a bone to beat another ape. It was a metaphor for the earliest human discovering a tool.
A brutal tool, to be honest, but the victorious ape was presumably just a little smarter than the losing ape and survived to pass along his genes.
One of the most effective tools these smarter genes of ours envisioned was the waterwheel. These were invented as far back as 4000 BC by the Mesopotamians to grind flour and irrigate fields. Waterwheels only capture about 20% of the water’s power but are far better than pounding wheat with a rock by hand.
Wikipedia
In 1878, the first hydroelectric generator fired up in Cragside in Northumberland at a small lake.
In that moment, the era of the modern power dam was born (fuergy.com).
Great! We had electricity. But because we are humans, the more we have of anything, the more we want.
Society electrified. We dammed every easy river first and then the hard ones. We are now damming remote and dangerous rivers wherever we can, even if we shouldn’t.
My wife and I drove through Quebec recently, the home of Hydro Quebec and half of Canada’s hydropower. British Columbia comes in second and is adding to its output with the new Site C dam in 2025, adding 8% to our grid (source: CBC).
BC Hydro photo
It is a huge dam – the 4th largest in the province - and yet everything will be spoken for by 2027. B.C. will have over 90 dams (source: BC Hydro) but where do we go from here? There are no major rivers left that do not have environmental or treaty roadblocks.
The availability of electricity led to inventions that required all sorts of power:
- Lighting
- Tram cars
- Electric heating
- Air conditioning
- Refrigeration
- Elevators
- Radio
- TV
- Computers
I wrote an article several years ago that calculated that 2% of Site C’s entire output could conceivably be used up by electric toothbrushes alone. And this was before e-bikes and electric cars arrived!
As clean and reliable as hydropower is, it is limited. And subject to droughts and floods. Electricity is not suitable for every energy need, so we sought other sources.
By 1986, when the International Whaling Moratorium was signed, it was estimated we had slaughtered 99% of all blue whales (and most of the right whales and sperm whales) for their blubber. Refined into a liquid, we used whale oil to light our homes for close to two centuries (source: Guardian).
We avoided “peak whale” only because of the discovery of naturally occurring underground oil. Soon, it powered our cars and ships, while its natural gas cousin lit our homes. Whale populations are slowly recovering, as a result.
As of 2024, the US is the largest exporter of natural gas to the world. In 2025, British Columbia will join the exporters club when Coastal Gaslink opens our gateway to Asian shipments. Asia will take all the gas we have and more, which is a good thing because our natural gas replaces their coal.
An age of plentiful power. More watts than we know what to do with. Of course, the more we have, the more we need. China is now the world’s largest market for electric cars, and will India be far behind?
The New Elephant in the Room
Move over electric cars. An even bigger mouth to feed has just sat down at the dinner table.
Today, when you do a simple Google search on your computer to find a new recipe or answer a question about an actor on a TV show, it consumes about 0.3 watt-hours of power. A million searches add up to about what a refrigerator requires. Nothing our grid cannot handle.
But artificial intelligence - AI - is set to turn all of this on its head. An AI using ChatGPT search takes 7-10 times as much power and is growing exponentially (source: Goldman Sachs). Some think ChatGPT searches will replace Google, and so Google has countered with Gemini, its own power-hungry AI tool. There are now at least a dozen AI systems hungrily learning and searching today, leading to a huge growth in data centres.
Today, data centres consume about three times the amount of power as the global fleet of electric cars (source: datacenterdynamics). AI and cryptocurrency mining could double this by 2026.
These not only need power to run, but they also need cooling, so they don’t melt. That takes power, too. And as anyone who has done a search, one query always leads to another. Demand grows exponentially.
If we are out of easy-to-dam rivers, and solar and wind are intermittent sources of power, what do we do?
Look at what the computing giants are doing for the answer.
The Solution
Microsoft just inked a deal with Constellation Energy to restart the Three Mile Island nuclear reactor. Remember this? It suffered a partial meltdown in 1979 and released radioactive gas. The entire U.S. industry came to a sudden halt.
Dormant for decades, Microsoft signed a deal that would reopen the Three Mile Island reactor to become its sole customer for – you guessed it – a giant data center. It is paying a premium price for this power because it is both clean and continuous.
Oracle, Google, Meta, and even Tesla want it too. The next phase in nuclear power will be small modular reactors (SMRs) and we eventually will see them pop up like mushrooms in the decade to come.
Nuclear is back, in a big way.
The Five-Year Gap
Meanwhile, there is a gap between what we need and what nuclear can deliver. We won’t see SMRs until about 2030, meaning we have a five-year gap in our power needs. What will we do in the meantime?
Natural gas is cheap and plentiful. We know how to make gas-fired generators quickly and inexpensively. Some analysts think these could fill the gap until nuclear arrives. Wind and solar will help, although they need land and the right locations, which are not always easily available.
Today, there is not a safe way to invest in nuclear power, except through giant utilities with some nuclear exposure. Cameco is the largest pure uranium company in the market today, but it is expensive and has had issues with underground flooding and tax issues in the past. Our choice has been to invest through TransCanada Pipelines as it owns the Bruce Power nuclear subsidiary, supplying nuclear power to Ontario.
On the natural gas side, it has been a difficult decade for Canadian producers. We have a few companies in our sights but nothing in the portfolio yet.
Solar, wind, geothermal, and natural gas will fill the power gap, but the bulk of power growth from 2030 on will likely come from nuclear energy.
Introducing Bianca
We added Bianca Rodrigues as our newest team member this month.
Bianca is originally from Brazil, and she holds degrees in Foreign Trades from Brazil and Business Administration from the University of Victoria.
She enjoys classic rock, travel, yoga, and has signed up to run the 8 km race this weekend.
Bianca is also deeply knowledgeable about airplane parts, having worked at a large Brazilian aircraft company for over a decade.
Welcome Bianca!
