In short
How AI-driven data center growth and electrification are reshaping global electricity demand, pricing, and investment—creating tighter power markets, higher power spreads, and new winners/losers across generation and grid technologies.
Guest backgrounds
No guests mentioned; host is Mayank Maheshwari, Morgan Stanley South Asia Energy Analyst.
Key claims
Global power demand will rise by over 1 trillion kWh annually through 2030, with AI data centers contributing nearly a fifth of growth. Data center investments could reach about $3T by 2028, adding ~126 GW. Power prices and power spreads likely rise (~15%), potentially creating ~$350B value across the power supply chain. Grid underinvestment drives reliance on gas, storage, and other technologies; gas becomes more “global” from 2026.
Notable examples
2024 global power sector investments at ~$1.5T; consumer prices up ~15%; US data centers drive ~half of global data center power by 2030; Asia sees ~15% spillover from US hyperscalers; gas investments hit record highs in 2024.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOThe Changing Landscape of Power Consumption
0:12 to 1:40
Explore the rapid changes in power consumption and its implications.
“It's Tuesday, December 2nd at 9pm in Singapore.”
Investments and Economic Shifts in Power Generation
1:40 to 2:54
Understand the rising investments and economic shifts in the energy sector.
“As power consumption rises, the difference between the price at which electricity is sold and the cost to generate it, also known as power spreads, are likely to rise by nearly 15%.”
Challenges and Opportunities in the Power Industry
2:54 to 4:04
Discover the challenges and opportunities faced by the power industry.
“Moving forward, the power industry faces a multi-decade transformation marked by unexpected shifts and opportunities.”
Transcript
Automatic transcript. May contain errors.0:00Welcome to Thoughts on the Market. I am Mayank Maheshwari, Morgan Stanley's South Asia Energy Analyst. Today, how AI and electrification are rewriting the rules of global power. It's Tuesday, December 2nd at 9pm in Singapore.
0:18If you have noticed your electricity bills are climbing and headlines are buzzing with talk of AI, you are not alone. The way we use and need power is changing fast. And it's impacting everyone from homeowners to major tech companies. Global power consumption is surging at the fastest pace in over a decade. Annual demand is set to rise by more than 1 trillion kilowatt hours every year through 2030, with AI-driven data centers contributing nearly a fifth of that growth. We estimate about$3 trillion investments in data centers by 2028, with power consumption growth of nearly about 126 gigawatts in these three years till 28.
1:02This is almost as large as Canada's total power consumption. And in this context, power prices are set to further rise. In 2024, the latest full-year data available, global power sector investments hit a new high of$1.5 trillion, and consumer power prices had risen by about 15%. By 2030, US power markets will account for half of the global data center power consumption and Asia will also see about a 15 % spillover of that US hyperscaler demand, which will be also part of why some of the power markets in Asia will get a lot tighter. As power consumption rises, the difference between the price at which electricity is sold and the cost to generate it, also known as power spreads, are likely to rise by nearly 15%.
1:54This expansion in profit margins could lead to higher earnings forecasts for power generation companies and create$350 billion in value creation through the entire power supply chain. At the same time, years of underinvestments in electric grids have led to bottlenecks, sparking a wave of new spending and pushing the industry to rely more on natural gas energy energy storage and other new technologies while also supporting the adoption of renewable power. In 2024, gas investments hit record highs and starting in 2026, gas is set to become a new truly global source of new power generation. Looking ahead, natural gas is expected to meet about a fifth of world's new power needs, excluding China, and nuclear energy is well positioned for increased investments, while batteries, which is energy storage, is also getting to get a new set in terms of new investments across data centers and in markets like China.
2:54Moving forward, the power industry faces a multi-decade transformation marked by unexpected shifts and opportunities. We'll see increased collaboration between fossil and non-fossil fuels, wider adoption of tiered pricing, and a surge in spot market and behind-the-meter sales, all driving longer-lasting elevated power spreads. Gas, nuclear, energy storage, and fuel cell supply chains, especially in Asia and the US, stand to gain from stronger pricing power, new growth prospects, while greed operators benefit from higher investments and better returns. On the flip side, pure solar and wind producers may continue to see rising costs in Asia, something we have already seen in US and Europe, as global grid leans more on batteries and steady fossil fuel supplies to balance the requirements of the rising needs of power across the supply chains in AI as well as domestic utilization of manufacturing.
3:56Ultimately, as AI and electrification supercharge power demand, the real challenge isn't just adding renewables. It's about building a resilient, flexible grid and navigating the new economics of energy. Thanks for listening. If you enjoy Thoughts on the Market, please leave us a review wherever you listen and share the podcast with a friend or a colleague today.
4:19Mayank Maheshwari:The preceding content is informational only and based on information available when created. It is not an offer or solicitation, nor is it tax or legal advice. It does not consider your financial circumstances and objectives and may not be suitable for you.
From the publisher
Our South Asia Energy Analyst Mayank Maheshwari discusses how the unprecedented demand to power AI is set to transform the power industry for years to come.
Read more insights from Morgan Stanley.
----- Transcript -----
Mayank Maheshwari: Welcome to Thoughts on the Market. I’m Mayank Maheshwari, Morgan Stanley’s South Asia Energy Analyst.
Today: how AI and electrification are rewriting the rules of global power.
It’s Tuesday, December 2nd at 9 pm in Singapore.
If you’ve noticed your electricity bills are climbing and headlines are buzzing with talk of AI, you’re not alone. The way we use – and need – power is changing fast, and it’s impacting everyone from homeowners to major tech companies.
Global power consumption is surging at the fastest pace in over a decade. Annual demand is set to rise by more than one trillion kilowatt-hours every year through 2030, with AI-driven data centers contributing nearly a fifth of that growth. We estimate about [U.S.]$3 trillion investments in datacenters by 2028, with power consumption growth of nearly about 126GW in these three years till [20]28. This is almost as large as Canada’s total [annual] power consumption.
And in this context, power prices are set to further rise. In 2024 – the latest full-year data available – global power sector investments hit a new high of $1.5 trillion, and consumer power prices have risen by about 15 percent. By 2030, U.S. power markets will account for half of the global data center power consumption. And Asia will also see about a 15 percent spillover of that U.S. hyperscaler demand, which will be also part of why some of the power markets in Asia will get a lot tighter.
As power consumption rises, the difference between the price at which electricity is sold and the cost to generate it – also known as power spreads – are likely to rise by nearly 15 percent. This expansion in profit margins could lead to higher earnings forecasts for power generation companies and create $350 billion in value creation through the entire power supply chain.
At the same time, years of under-investments in electric grids have led to bottlenecks, sparking a wave of new spending and pushing the industry to rely more on natural gas and energy storage and other new technologies – while also supporting that option of renewable power. In 2024, gas investments hit record highs, and starting in 2026 gas is set to become a new truly global source of new power generation. Looking ahead, natural gas is expected to meet about a fifth of [the] world’s new power needs, excluding China. And nuclear energy is well positioned for increased investments; while batteries – which is energy storage – is also getting to get a new set in terms of new investments across datacenters and in markets like China .
Moving forward, the power industry faces a multi-decade transformation, marked by unexpected shifts and opportunities. We’ll see increased collaboration between fossil and non-fossil fuels, wider adoption of tiered pricing, and a surge in spot market and behind-the-meter sales all driving longer-lasting, elevated power spreads. Gas, nuclear, energy storage, and fuel cell supply chains – especially in Asia and the U.S. – stand to gain from stronger pricing power [and] new growth prospects, while grid operators benefit from higher investment and better returns. On the flip side, pure solar and wind producers may continue to see rising costs in Asia, something we have already seen in [the] U.S. and Europe, as [the] global grid leans more on batteries and steady fossil fuel supplies to balance the requirements of the rising needs of power across the supply chains – in AI as well as domestic utilization of manufacturing.
Ultimately, as AI and electrification supercharge power demand, the real challenge isn’t just adding renewables. It’s about building a resilient, flexible grid and navigating the new economics of energy.
Thanks for listening. If you enjoy Thoughts on the Market, please leave us a review wherever you listen and share the podcast with a friend or colleague today.