S&P Global — 11 October 2024
Daily Update: October 11, 2024
Fossil Fuel Demand Set To Expand With AI
By Nathan Hunt
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"Natural gas will help power the rapid growth of artificial intelligence with its insatiable demand for reliable electricity," Chevron CEO Mike Wirth said Sept. 17 at an energy conference in Houston. "[This] means AI's advance will depend not only on the design labs of Silicon Valley, but also on the gas fields of the Permian Basin."
In the short and medium term, there is little question that the widespread adoption of AI will lead to a big increase in demand for and use of fossil fuels. Datacenters require huge amounts of energy to power their processors and cool their facilities.
By building out their AI infrastructure, the five largest cloud infrastructure providers increased their capital expenditure by 57% year over year in the second quarter of 2024 to $55 billion, according to S&P Global Market Intelligence. Investors see a big opportunity in the sudden demand for more and bigger datacenters. Total funding and M&A for the datacenter sector has reached nearly $35 billion year to date. Blackstone alone has about $55 billion of datacenters in its portfolio and another $70 billion in the pipeline.
The demand for energy for those datacenters is also driving private equity investments in the global oil and gas industry. Private equity and venture capital investments in this sector are on track to exceed even the boom year of 2020. According to S&P Global Market Intelligence, investing in fossil fuel assets is considered a strategic move for private equity since AI datacenter infrastructure requires levels of energy that intermittent renewable power, such as weather-dependent solar and wind, cannot provide. According to a report from Goldman Sachs, AI datacenters are forecast to use 8% of US power by 2030.
Datacenter operators are entering negotiations with natural gas pipeline providers such as North American energy company TC Energy to gain direct access to energy sources. The model is to tap into the main pipeline, build a lateral pipeline to a datacenter and generate energy from the natural gas on-site using a dedicated power plant. S&P Global Commodity Insights' May 2024 Planning Case projects incremental datacenter electricity demand to be about 200 TWh by 2030. Pipeline companies expect to be among the main beneficiaries of datacenter growth.
While the scale and speed of AI adoption clearly favors increased fossil fuel usage, there are theories that it will reduce energy usage and emissions in the longer term. Some believe that AI will help with grid maintenance and reliability by identifying parts that need to be replaced or areas where vegetation needs to be controlled. In addition, AI could be used to maximize efficiency within the power grid. With time, materials, semiconductors and energy storage could become more efficient, and AI could require far less energy than current projections suggest.
Today is Friday, October 11, 2024, and here is today’s essential intelligence.
IEA Sees 'Massive Global Growth Of Renewables To 2030' Amid COP Pledge
The world's renewable power capacity is expected to surge over the rest of this decade, with global additions between 2024 and 2030 forecast to almost triple to around 5,500 GW, the International Energy Agency said Oct. 9. Supportive policies and favorable economics are key drivers, with China alone set to account for 60% of the new renewable capacity installed, according to Renewables 2024, the IEA's annual report for the sector.
—Read the article from S&P Global Commodity Insights
Investor Risk Aversion Eases, Though Lingers, In October
A risk-averse mood continues to cloud US stock market investor outlook for a fourth straight month, although overall risk sentiment has improved from September's 16-month low, according to the latest results from S&P Global's Investment Manager Index survey. The Risk Appetite Index remained in negative territory in October's survey at negative 10%, up from negative 29% in September. This marks the first rise in sentiment since May's index reached 28% from 5% in April. The index showed positive readings from February to June, indicating net risk tolerance in that period, but has remained negative since July.
—Read the article from S&P Global Market Intelligence
Global Venture Capital Funding Rounds Dip In Q3 2024
Global venture capital funding rounds decreased in both deal value and volume in the third quarter. Deal value from July to September amounted to $61.32 billion, down 7.8% from $66.54 billion during the same period in 2023, according to S&P Global Market Intelligence data. The number of announced transactions during the quarter also fell to 3,341 from 4,025 in the year-ago period.
—Read the article from S&P Global Market Intelligence
Russian Gas Flows Via Ukraine Totaled 1.26 Bcm In September: AGPU
Russian gas deliveries via Ukraine totaled 1.26 Bcm in September, up by 0.5% year on year, but still only 39% of the contracted transit volume, data published Oct. 9 by Ukrainian gas industry group AGPU showed. Despite the ongoing war, Russia's Gazprom has continued to send gas to Europe via Ukraine, with volumes delivered at the Sudzha interconnection point on the Russia-Ukraine border at a rate of some 42 million cu m/d for most of 2024.
—Read the article from S&P Global Commodity Insights
Iraq Says It Is Starting Jet Fuel Exports As Middle East Prices Rally
Iraq has begun jet fuel exports from domestic ports, which would be the first shipment since January 2023, as Middle East prices have surged this month. Export operations have begun at a rate of 800 to 1,000 metric tons/day, Iraqi News Agency reported Oct. 8, citing Hamid Younis, undersecretary of the ministry of oil for refining affairs.
—Read the article from S&P Global Commodity Insights
MediaTalk | Season 2 | Ep. 33 - Outlook For Video Game Hardware, Software, eSports
Though the video game market is eagerly looking ahead toward the holiday sales market, it is facing myriad headwinds. Console shipments are struggling both as the market waits for a new Nintendo Switch and consumers digest the price tag of the new PlayStation 5 Pro. This episode of MediaTalk brings back S&P Global Market Intelligence Kagan analyst Neil Barbour, who leads video game coverage for the consumer technology team. Then, Neil and fellow Kagan analyst Richard Berndes weigh in on the top video games from the sports arena and the eSports market.
—Listen and subscribe to the podcast from S&P Global Market Intelligence
Washington, DC: Datacenter And Energy Innovation Summit 2024 (Oct. 30, 2024)
Join Datacenter and energy analysts from 451 Research, S&P Global, and expert guests to discuss the latest trends and developments in the Datacenter industry, with a specific focus on the impact of AI on energy consumption. Don't miss this opportunity to gain valuable knowledge and network with industry professionals.
—Register for the in-person event from S&P Global Market Intelligence