Really enjoyed this interview by Dwarkesh Patel with Casey Handmer on the future of energy. Casey makes a compelling case for solar as the torch-bearer for the coming energy transition.
For the first time in my life, I started contemplating buying rural desert land in Nevada and West Texas.
Highlights:
- China currently has 20x more annual solar manufacturing capacity than the US, which could give it a significant edge in the AI race due to massive energy needs, but the US can catch up within five years through automation, cheap natural gas, and financial advantages. (PD: Seems like a very aggressive timeline and unlikely)
- China's energy security is vulnerable due to reliance on imported oil and geopolitical risks, while the US benefits from isolation and stable neighbors.
- AI will drive hundreds of gigawatts of new energy demand; solar is positioned as the scalable solution, potentially powering off-grid data centers with batteries by 2027, as natural gas turbines face supply limits.
- Solar costs are dropping rapidly (43% reduction per production doubling), making it cheaper than running existing coal plants; by 2040, new data centers could be 100% solar-powered.
- US environmental regulations (e.g., NEPA) slow solar deployment—Texas installs 10x more than California due to lighter rules—highlighting regulatory reform as key to competing.
- Large-scale solar for 5 GW data centers requires ~50,000 acres, feasible in places like Texas, but permitting and non-contiguous land use are challenges.
- Batteries enable temporal arbitrage, storing solar for peak times and reducing grid dependency, with per capita battery capacity surging (e.g., from 10g to 100kg via EVs).
- As batteries proliferate, grid utilization will decline, electron travel distances will shorten, and mobile battery markets could emerge for flexibility.
- GDP underestimates AI's impact due to deflation; energy consumption (e.g., solar-powered AI) is a better metric, as AGI could automate $60T in global labor value.
