AI ————————— Clean Energy

I’ve drawn a line.

The line follows the rise of AI to increasing demand for clean energy.

The launch of Chat GPT in late 2022 ignited rapid AI competition. Running data centres that are required to train and use AI,

requires a lot of energy. In fact, Mark Zuckerberg, whose company Meta is one of the hyperscalers in this race recently said, “I

actually think that, before we run into [capital / demand] constraints, we’re going to run into energy constraints.”

 

But how much power do data centres use?

A lot.

One estimate suggests that data centres have a greater carbon footprint than aviation. And given the growth in AI-led demand,

according to industry research, they are forecast to consume between 6.5% and 7.5% of US electricity in 2030 (up from just

2.5% in 2022).

For cloud providers, including Amazon’s AWS, managing their electricity needs while achieving their climate change goals—

including net zero by 2040 for Amazon—becomes increasingly challenging.

 

So how are the likes of Amazon and Meta going to achieve these climate change goals?

During our in-person engagement with Amazon in March 2024, we discussed how AWS is innovating to secure reliable carbonfree

power. Amazon discussed their recent acquisition of a site at Talen Energy’s Susquehanna nuclear power plant, the first

deal of its kind, to provide carbon-free baseload power.

We also discussed Amazon’s status as the largest corporate purchaser of renewables PPAs (power purchase agreements),

helping them towards their goal to secure 100% renewable energy by 2030.

We expect and are positioned for other innovative announcements not just from Amazon, but also cloud-provider peers Google

and Microsoft – all of which have ambitious climate change goals. For example, Microsoft recently secured over 10GW of

Brookfield’s renewables pipeline and is working with Constellation Energy to restart Three Mile Island’s nuclear power station to

match the energy its data centres use with carbon-free power.

 

What opportunities does this present?

Rapid data centre expansion is just one of several structural tailwinds supporting higher energy demand in the US. Other trends

where this straight line to the demand of clean energy can be drawn include the electrification of homes, buildings and transport

and ongoing reshoring to the US from China.

This demand necessitates a clean response, including new investments in renewables, storage, carbon-free nuclear as

well as expanding the grid. It needs to be clean not only to meet the climate change commitments of the US and these large

companies, but also because renewables are the cheapest source of power today.

 

So what companies are you investing in? Where can I find out more?

To learn more about Munro Partners, our Munro Global Climate Leaders strategy and the companies we think will benefit from

these trends, please visit: www.munropartners.com.au/funds/munro-climate-change-leaders-fund

The engagement with Amazon is one of many case studies in our latest Responsible Investment Report. To read others, our

climate change engagement targets and more, please visit: www.munropartners.com.au/our-story/esg

 

Mike Harut

Partner & Responsible Investment Manager

 

 

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