OPINION:
Tesla recently announced that it would lay off about 10% of its workforce. This follows news that its year-over-year sales for the first quarter were up just 2.6%, compared with an 85% increase between the first quarters of 2022 and 2023.
That unhappy news follows similar indications of a slow but steady migration away from electric vehicles from companies like Ford, Volkswagen, Stellantis and Toyota. It is bad enough that even General Motors, which has become a wholly owned subsidiary of the Biden administration, experienced a 21% sales drop in electric vehicles in the first quarter of this year.
It turns out that lack of consumer demand, problematic supply chains that originate in or transit the slaving, genocidal regime of China, and the likelihood that a generous but regressive and ultimately unaffordable tax credit will eventually be reduced don’t add up to a winner in the marketplace. Who knew?
The fact that the government has to use its coercive power to mandate the sale of a product probably tells you that the product in question is not very good.
The good news for electric utilities and their workers is that they have a different, more pressing, and more important opportunity to help their fellow U.S. citizens.
In almost every corner of the nation, data centers — which curate all the data created by businesses and individuals — are being built or expanded. Given the current scope and size and electronic interactions of all kinds and the likely future need for increased data collection and transfers — think artificial intelligence — it should come as no surprise that these data centers are projected in a few short years to require as much electricity as all of the households in the United States.
To give you an idea of the size of the added demand, current residential use is about 40% of total electricity demand in the United States. In other words, in the next few years, we are going to need to build hundreds of power plants, enough to replace aging plants and meet an additional 40% or more of current demand.
These new data centers promise enhanced computing power, increased internet access and speed, and the acceleration of artificial intelligence. These technologies are likely to be the commanding economic heights of the next century worldwide. To win that competition and realize the full potential of information technologies, it is essential that we have abundant, affordable and reliable electricity.
Unfortunately, many regions of the nation are already short of electricity generation or have regulatory approaches that retard and complicate the generation and delivery of reliable, affordable energy. Texas had a blackout that killed hundreds in 2021, and the power system for the mid-Atlantic and some of the Midwest — known as PJM — almost had a total blackout on Christmas Eve 2022.
The North American Electric Reliability Corp., which is an overseer of electric reliability, has repeatedly warned that large portions of the nation’s electricity systems are operating with insufficient generation to ensure a reliable power supply.
Not surprisingly, data centers need reliable power every day, all the time. As a practical matter, that means utilities and merchant generators will need to build power plants of all kinds, with a special focus on plants that are pretty much always on — coal or nuclear — or that can be turned on quickly — natural gas. Natural gas generation will, in turn, require pipelines to deliver natural gas.
Given the scope of the challenge and the presence of many state laws that require a certain amount of generation from alternative sources, we will also need to build more wind and solar generation.
This massive and essential effort will require a shift in the mindset of many, including the environmental community and the owners of some of the data centers that have committed their businesses to net-zero greenhouse gas emissions.
Failing to meet this challenge and take advantage of this opportunity, however, would be ruinous to the American economy and technological leadership. It would ultimately cede the information economy to our rivals and adversaries, and no one wants that.
• Michael McKenna is a contributing editor at The Washington Times and a co-host of the podcast “The Unregulated.”
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