I think 10x decrease in energy prices is too much. My reasons are:
There are some constrains on solar/wind which are currently not binding, but will be by the time we have converted most energy production to green energy. The main ones are metals (see e.g. https://www.coppolacomment.com/2021/03/from-carbon-to-metals-renewable-energy.html) and land use (in India, China, Europe, Japan and a few other Asian countries especially as population density is high, but that’s most of the world population anyway). This of course does not consider the possibility of major technological breakthroughs in organic solar and energy conversion/transport, which may happen but are not guaranteed so I think they are out of the scope of your exercise.
As the cost of energy lowers, we will consume more. In poor countries especially, plus you mentioned increased consumption by supercomputers and AI. This will partially balance the cost of production falling, so my (uneducated) guess would be that a 2x-3x decrease in prices is a more reasonable expectation. An analysis by an expert could convince me otherwise.
Like rayom I also noticed you did not mention anything about biology and medicine. I think there will be some advances from that side. A malaria vaccine seems probable by 2040 (maybe ~80%?) and would be a big thing for large parts of the world. Also some improvement in cancer therapy seem to have relatively high probability (nothing even remotely like “cure all cancer”, to be clear). We might get some improvement for Alzheimer, dementia or other age-related illnesses, but my “business as usual” expectation is that only moderate advancements will be widely deployed by 2040. Nevertheless they might be sufficient to improve significantly the quality of life of elderly people in rich countries.
Extending on point 2: if we want to talk about a price drop, then we need to think about relative elasticity of supply vs demand—i.e. how sensitive is demand to price, and how sensitive is supply to price. Just thinking about the supply side is not enough: it could be that price drops a lot, but then demand just shoots up until some new supply constraint becomes binding and price goes back up.
(Also, I would be surprised if supercomputers and AI are actually the energy consumers which matter most for pricing. Air conditioning in South America, Africa, India, and Indonesia seems likely to be a much bigger factor, just off the top of my head, and there’s probably other really big use-cases that I’m not thinking of right at the moment.)
I understand that Malaria resists attempts at vaccination, but regarding your 80% prediction by 2040, did you see the news that a Malaria vaccine candidate did reach 77% effectiveness in phase II trials just last month? Quote: “It is the first vaccine that meets the World Health Organization’s goal of a malaria vaccine with at least 75% efficacy.”
You are right of course, and I am going by other people’s analysis so I am not sure how much they are correct or wrong this time around. I do not think we will have hugely rising commodity prices making green energy unfeasible, unless there is a war (or just a trade war) blocking the supply of a key input.
Nevertheless, the extrapolation of decreasing costs for solar and wind based on current trends will eventually hit some “hard” limit, and metals are a likely candidate. After all, as manufacturing costs for panels reduce, the fraction of cost coming from raw materials grows even at constant prices. And to get prices going down 10x, we need to supply several times more energy than now (maybe 5x?) meaning growing wind and solar by two orders of magnitude in 20 years. This could plausibly put strain on the supply of raw materials.
Of course, if the bottleneck will turn out to be energy distribution and storage, then we could get prices going down 10x at the source (what Daniel is interested in) but not for household consumption, and only a modest increase in demand.
+1 to this, though I think a slightly modified version of jacopo’s argument is stronger: new constraints are likely to become binding in general when cost of current constraints drops by a factor of 10, though it’s not always obvious which constraints will be relevant.
Interesting—source pls? The price of energy is one of the most important things on my list so I’m especially keen to hear more evidence for and against my projected 10x drop.
As jacopo pointed out the Simon–Ehrlich wager is a key argument. As far as solar costs go, the cost of actual solar cells fell a lot more in the last years then installation costs.
When it comes to solar cells for training neural nets, it’s worth noting that those don’t need to be stationed on earth.
At 10$/kg or less for transporting material to space with Starship (and it’s successors) it’s possible that it makes more sense to have the data center in space where it gets exposure to the sun 24⁄7 and there’s no sky that blocks sunlight.
For earth based datacenters, if energy is the limiting factor and a lot of the energy comes from solar, it’s possible to do all the training for neural nets in the summer where there’s plenty of solar energy and not train your models on days where solar cells and wind farms produce little energy.
Is refrigeration a big part of data centers energy costs ? This would mean the best places for solar energy are also the worst places for data centers...
I’ve thought a bit about this, but haven’t done any calculations. My guess is that it would be overall cheaper to have datacenters in sunny regions than to try to get solar panels in cold regions. Your refrigeration (and heat management more generally) electricity bill will be higher, but not that much higher, but your electricity costs will be much lower.
If refrigeration becomes a major part of the energy cost it’s worth noting that there’s thinking about putting data centers under water where they can be cooled more easily. At the moment that’s not viable but it might be in 2040.
True but putting them in Northern part of the world may also be a good idea. Right now looking for example at Google’s data centers map there seems to be a very small trend toward northern locations (at least in Europe), but it may just be a flux due to local financial incentives being more favorable in some countries.
I think he might be referring to the Simon–Ehrlich wager. And indeed there have been other similar claims in the past, more often proven wrong than correct.
Thanks! I edited my thing on energy to clarify, I’m mostly interested in the price of energy for powering large neural nets, and secondarily interested in the price of energy in general in the USA, and only somewhat interested in the price of energy worldwide.
I am not convinced yet that the increased demand from AI will result in increased prices. In fact I think the opposite might happen. Solar panels are basically indefinitely scalable; there are large tracts of empty sunny land in which you can just keep adding more panels basically indefinitely. And transporting the energy to other places won’t be an issue for AI because the datacenters can be built right where the solar panels are. If storing energy is a problem, just do your AI training runs during the day when energy is plentiful. So I predict that AI-related demand for energy will mostly just result in vastly increased supply, rather than increased prices—but when supply increases, economies of scale will result, that may even drive the price lower!
The point about metals is new to me, I’ll go read up on that, thanks. For some reason your link seems to be broken.
Thanks for the clarifications! I realized that maybe you are mostly interested on the tech sector in the US and AI-related development, which explains also why you didn’t think of biomedical research immediately. Is this impression correct? If so, you might want to edit further the question to restrict the range of answers.
I fixed the link, I didn’t notice but it had taken the ) as part of the address.
BTW, I read your post on military tech in the meantime, it was interesting.
It’s true that that’s what I’m mostly interested in, but I don’t want to restrict the question to that stuff—I asked this question so I could learn more things! Please don’t hesitate to answer with biotech stuff or non-US stuff or non-tech stuff!
I think 10x decrease in energy prices is too much. My reasons are:
There are some constrains on solar/wind which are currently not binding, but will be by the time we have converted most energy production to green energy. The main ones are metals (see e.g. https://www.coppolacomment.com/2021/03/from-carbon-to-metals-renewable-energy.html) and land use (in India, China, Europe, Japan and a few other Asian countries especially as population density is high, but that’s most of the world population anyway). This of course does not consider the possibility of major technological breakthroughs in organic solar and energy conversion/transport, which may happen but are not guaranteed so I think they are out of the scope of your exercise.
As the cost of energy lowers, we will consume more. In poor countries especially, plus you mentioned increased consumption by supercomputers and AI. This will partially balance the cost of production falling, so my (uneducated) guess would be that a 2x-3x decrease in prices is a more reasonable expectation. An analysis by an expert could convince me otherwise.
Like rayom I also noticed you did not mention anything about biology and medicine. I think there will be some advances from that side. A malaria vaccine seems probable by 2040 (maybe ~80%?) and would be a big thing for large parts of the world. Also some improvement in cancer therapy seem to have relatively high probability (nothing even remotely like “cure all cancer”, to be clear). We might get some improvement for Alzheimer, dementia or other age-related illnesses, but my “business as usual” expectation is that only moderate advancements will be widely deployed by 2040. Nevertheless they might be sufficient to improve significantly the quality of life of elderly people in rich countries.
Extending on point 2: if we want to talk about a price drop, then we need to think about relative elasticity of supply vs demand—i.e. how sensitive is demand to price, and how sensitive is supply to price. Just thinking about the supply side is not enough: it could be that price drops a lot, but then demand just shoots up until some new supply constraint becomes binding and price goes back up.
(Also, I would be surprised if supercomputers and AI are actually the energy consumers which matter most for pricing. Air conditioning in South America, Africa, India, and Indonesia seems likely to be a much bigger factor, just off the top of my head, and there’s probably other really big use-cases that I’m not thinking of right at the moment.)
I understand that Malaria resists attempts at vaccination, but regarding your 80% prediction by 2040, did you see the news that a Malaria vaccine candidate did reach 77% effectiveness in phase II trials just last month? Quote: “It is the first vaccine that meets the World Health Organization’s goal of a malaria vaccine with at least 75% efficacy.”
No I missed it, that’s great! I was only aware of phase I. It should be revised way up then.
People argued for metal prices being a problem for a long time and those predictions usually failed to come true.
You are right of course, and I am going by other people’s analysis so I am not sure how much they are correct or wrong this time around. I do not think we will have hugely rising commodity prices making green energy unfeasible, unless there is a war (or just a trade war) blocking the supply of a key input.
Nevertheless, the extrapolation of decreasing costs for solar and wind based on current trends will eventually hit some “hard” limit, and metals are a likely candidate. After all, as manufacturing costs for panels reduce, the fraction of cost coming from raw materials grows even at constant prices. And to get prices going down 10x, we need to supply several times more energy than now (maybe 5x?) meaning growing wind and solar by two orders of magnitude in 20 years. This could plausibly put strain on the supply of raw materials.
Of course, if the bottleneck will turn out to be energy distribution and storage, then we could get prices going down 10x at the source (what Daniel is interested in) but not for household consumption, and only a modest increase in demand.
+1 to this, though I think a slightly modified version of jacopo’s argument is stronger: new constraints are likely to become binding in general when cost of current constraints drops by a factor of 10, though it’s not always obvious which constraints will be relevant.
Interesting—source pls? The price of energy is one of the most important things on my list so I’m especially keen to hear more evidence for and against my projected 10x drop.
As jacopo pointed out the Simon–Ehrlich wager is a key argument. As far as solar costs go, the cost of actual solar cells fell a lot more in the last years then installation costs.
When it comes to solar cells for training neural nets, it’s worth noting that those don’t need to be stationed on earth.
At 10$/kg or less for transporting material to space with Starship (and it’s successors) it’s possible that it makes more sense to have the data center in space where it gets exposure to the sun 24⁄7 and there’s no sky that blocks sunlight.
For earth based datacenters, if energy is the limiting factor and a lot of the energy comes from solar, it’s possible to do all the training for neural nets in the summer where there’s plenty of solar energy and not train your models on days where solar cells and wind farms produce little energy.
Is refrigeration a big part of data centers energy costs ? This would mean the best places for solar energy are also the worst places for data centers...
I’ve thought a bit about this, but haven’t done any calculations. My guess is that it would be overall cheaper to have datacenters in sunny regions than to try to get solar panels in cold regions. Your refrigeration (and heat management more generally) electricity bill will be higher, but not that much higher, but your electricity costs will be much lower.
If refrigeration becomes a major part of the energy cost it’s worth noting that there’s thinking about putting data centers under water where they can be cooled more easily. At the moment that’s not viable but it might be in 2040.
True but putting them in Northern part of the world may also be a good idea. Right now looking for example at Google’s data centers map there seems to be a very small trend toward northern locations (at least in Europe), but it may just be a flux due to local financial incentives being more favorable in some countries.
Google seems to have one datacenter in Ireland, Denmark, Belgium, Finnland and two in the Netherlands.
Those seem to be countries that currently have cheap industrial electricity: https://www.statista.com/statistics/1046605/industry-electricity-prices-european-union-country/
I think he might be referring to the Simon–Ehrlich wager. And indeed there have been other similar claims in the past, more often proven wrong than correct.
Thanks! I edited my thing on energy to clarify, I’m mostly interested in the price of energy for powering large neural nets, and secondarily interested in the price of energy in general in the USA, and only somewhat interested in the price of energy worldwide.
I am not convinced yet that the increased demand from AI will result in increased prices. In fact I think the opposite might happen. Solar panels are basically indefinitely scalable; there are large tracts of empty sunny land in which you can just keep adding more panels basically indefinitely. And transporting the energy to other places won’t be an issue for AI because the datacenters can be built right where the solar panels are. If storing energy is a problem, just do your AI training runs during the day when energy is plentiful. So I predict that AI-related demand for energy will mostly just result in vastly increased supply, rather than increased prices—but when supply increases, economies of scale will result, that may even drive the price lower!
The point about metals is new to me, I’ll go read up on that, thanks. For some reason your link seems to be broken.
Thanks for the clarifications! I realized that maybe you are mostly interested on the tech sector in the US and AI-related development, which explains also why you didn’t think of biomedical research immediately. Is this impression correct? If so, you might want to edit further the question to restrict the range of answers.
I fixed the link, I didn’t notice but it had taken the ) as part of the address.
BTW, I read your post on military tech in the meantime, it was interesting.
It’s true that that’s what I’m mostly interested in, but I don’t want to restrict the question to that stuff—I asked this question so I could learn more things! Please don’t hesitate to answer with biotech stuff or non-US stuff or non-tech stuff!
Thanks!