Thought Energy
Artificial intelligence converts energy into cognition.
While efficiencies are accruing rapidly - it takes one-thousandth the energy to mint a token of cognition as it did in 2022 - we will be minting a billion times more tokens by the early 2030s.
The energy inputs for artificial intelligence are both substantial and fundamental. Without energy, a data centre is a dark box filled with expensive, pointless kit.
As is the case with matter, energy resources grow on a timescale fundamentally gated by material resources: the manufacturing of solar cells, the installation of grid-scale batteries, and the buildout of the electricity distribution network.
The IEA forecasts data centre energy usage to double by 2030, from nearly 500 terawatt hours, to around one petawatt hour.
With $11,000,000,000,000 contingent upon that energy being available as supply rises to meet demand, the entire ecosystem surrounding electricity generation and distribution now gets frame-dragged from slow-and-steady into a very different cadence.
That's why it's a focus for Noops Research, and the second topic explored in our AI Investor event.
The Buildout
In the US alone, US$110bn of generation needs to be added to the electricity network, adding $25 to 30bn a year to system costs. Permitting and equipment create delays up to seven years. Even with US$80 to 115bn of transmission approved or under construction through 2030, it's nowhere near fast enough: half the additional US capacity planned for 2026 won't come online. Noops read: "Financed at data centre speed, and delivered at utility speed."
In Australia, AEMO ESOO has data centre demand rising from 5 to 34 TWh by 2035-36 - from 3% to 13% of consumption, with a high-end case of 52 TWh, or around 20% of electricity consumed.
The Pushback
Virginia expects a 25% rise in electricity costs, while Fortune puts data centres at ~$23bn in higher US electricity costs. State governments are fighting back, while the US EPA lets data centre generation sidestep certain pollution rules.
In Texas, ERCOT has a queue of 1,800+ projects, with 474 GW requested - that's five times record peak demand, ~90% from data centres. Texas Governor Abbott froze approvals pending an audit. The most permissive large-load regime in the developed world has paused itself.
Buying the slow layer
Meta invests US$50B in Louisiana to fund seven gas plants, three grid batteries and nuclear upgrades, so ratepayers don't pay. Ireland let the mismatch produce a ceiling; Meta threw money at the problem in order to accelerate the slow layer.
Google's €13bn investment in Finland comes with a 22-year PPA that keeps the Loviisa nuclear plant alive past 2030. That reactor generates 10% of Finland's electricity, and Google gets up to 50% of output 2030-2049, plus pays for 629 MW of wind generation and a 94 MW battery.
Noops framing: Power-rich jurisdictions are the new petrostates, selling energy in the form of tokens. Finland has been cited as "the Texas of Europe." Australia has vast, as yet untapped renewable energy resources.
Data Centres as Grid Assets
A data centre can go from 100% to 10% utilisation in roughly three minutes, in response to grid demand. Price-inelastic demand that is curtailable in three minutes "is better than a peaker plant." This reframes the political argument, because a data centre can get paid for turning off rather than arguing bills won't rise. Data centres use the electrons when they're in sufficient supply, then leave the grid - perhaps to run on their own batteries - when the grid can't support them, as well as collecting a fee for leaving the grid.
Solar and batteries
Solar panels at ~12 cents/W, down from $5 to 6/W in 2000, now called "offensively cheap". 1.2 TW of distributed solar worldwide at the end of 2025, roughly three times the nuclear fleet by capacity. China's manufacturing capacity 1.36 TW per annum. Philippines rooftop nearly doubled in a year, three-year payback. India adding 500,000 rooftops a month. Africa adding ~17 GW this year, mostly commercial. Rooftop solar has created a 'utility death spiral' in Pakistan, while South African generator Eskom looks to data centres and bitcoin miners to reverse falling sales.
Perth is now "covered in rooftop solar," which means a cloud can drop output by the equivalent of a nuclear plant. It also means grids produce too many electrons at midday to be used, making batteries even important, as coverage and protection against both clouds and sun.
California survived its hottest August on record with no Flex Alert since 2022 and no rolling outage since 2020. CAISO battery storage went from under 100 MW in 2020 to over 17,000 MW today, targeting 20 to 25 GW by 2045. May 2026 saw the first large grid to run over 50% solar for a month. Gas still makes up a third of supply in California, and AI data centre demand means supply must keep growing.
As we do in Australia
Federal government standards for data centres mandate that every proposal comes with a fully costed plan to generate its electricity renewably; "net generators, not net users". Should be enshrined law in early 2027, with ~90 projects in the pipeline held to existing rules.
Noops Research whitepaper "A Second Bite of the Golden Apple" recommends that in-the-pipeline projects be made to comply with the new regulations, both for climate and economic reasons, as renewable energy is a key value differentiator for Australian data centres.
Prime Minister Anthony Albanese recently softened the Commonwealth's position, allowing for state governments to pursue their own energy plans - and leaving gas-fired generators open as a possibility.
A third of Australia's single-dwelling homes have PV; the grid has a surfeit of midday electrons; home battery storage is deployed and growing rapidly, replacing much of the need for grid-scale batteries.
Any price
Inference density generated by greenfields data centres means a couple of hundred megawatts input can drive more than US$10bn of annual revenue. That massive differential is why data centre operators will pay anything reasonable for electrons, and why price-inelastic demand is the political problem. It's also why the Federal Government asserts that data centres could provide much of the capital inputs for Australia's electrification, generating an outcome in which everyone wins.