May 14, 2012
With this issue of Energy-Facts.org, permit me to enthusiastically introduce you to a new feature of our newsletter. My old friend and colleague Mark Mills has agreed to provide us with regular Commentaries from his on-going research and experience in a fascinating and important aspect of our future – the intersection of information technologies, and the Cloud, and the far-reaching implications for electricity and coal demand. You can learn more about Mark’s background at our Energy-Facts.org web site.
Some of you may recall that Mark pioneered a study ten years ago, titled The Internet Begins With Coal, and wrote a collateral Forbes article at that time titled Dig More Coal, The PCs are Coming, where he revealed the first-ever research to estimate the aggregate electric demand of the Internet. The study ignited quite a fire-storm, and should be credited with launching an entire discipline of study, engineering and even regulations associated with the electric appetite of data centers. There’s much more to the story. It’s all about our nation’s and the world’s economic future. For an example of some of what Mark has written earlier about this subject, you can read one of his relevant Forbes columns here.
I know you will find Mark's Commentaries about this entire domain illuminating and provocative – and complementary to the research we’ve been providing you already. Mark’s work has significantly influenced my own work on energy. He is always on the cutting edge.
With his first Commentary below, Mark begins with the big picture – the linkages between prosperity, information technology, electric demand-- and coal. There will be more to come, generally alternating with my Commentaries, which you can be sure I will continue at my current frequency.
Thank you for your continuing consideration. And below, Mark's first Commentary. -- Frank Clemente
The "New Economy": Transistors, Electrons and Coal
| "[You] can hold more than 100 billion transistors in your hand... those transistors cost less than a dollar per billion... Semiconductor fabrication lines [today] churn out far more transistors than the world’s farmers grow grains of wheat or rice." Brian Hayes, The Memristor, American Scientist, March-April 2011 |
We know three things about transistors.
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They have already changed the world.
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Silicon technology progress is not over, and vast domains of untapped social and economic opportunity remain.
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Every single transistor consumes electricity.
And we know two other related facts:
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The energy cost of computation has collapsed, but the overall amount of energy consumed for computing and communicating has risen dramatically, and thus;
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The cost and availability of electricity to fuel the information-centric part of the world’s economies are of ever-increasing importance – and that’s where coal comes in.
The above realities underlie Commentaries we plan in coming months. With this first Commentary we spend a little more time than we will in forthcoming issues, setting the stage with the big picture about linkages between the "Cloud" (more about the Internet becoming the Cloud in due course), electricity, and coal.
The future demand for coal, for any primary fuel source, is, to state the obvious, fundamentally anchored in electricity demand. How much more will be needed, at what quality (specifically the quality of reliability), and at what price?
And the future demand for electricity is rooted in just two variables:
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Demographics -- population, wealth, economic & social activities, and population concentration (on this latter, see Dr. Clemente’s recent Commentary on cities).
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Technology -- the invention of new things, and innovating existing things that consume electricity.
Information technology has had and continues to be an integral feature of all aspects of the above factors.
Information technology is now an enormous and fast-growing part of the economy.
U.S. Shares of GDP
[Moving Information vs Moving People & Things]
Source: U.S. Census Table 670. Gross Domestic Product i
In today's America, the $1.1 trillion share of our economy devoted to information and ideas -- moving bits -- has surpassed the share associated with transporting people and stuff. The gap will widen. This is the future as well for developing nations.
The atoms-moving industry is almost entirely about liquid fuels, where oil dominates -- the bits-moving industry is all about electricity, where coal dominates.
Making and moving bits involves everything from digital movies and server farms, from iPhones and Intel to Netflix and Facebook, all with much more growth potential than all aspects of moving stuff and people, the classic transportation sector, which includes everything from making and using cars and airplanes, from F150s to Norfolk Southern and FedEx.
In the decade following 2000, the transportation sector of the U.S. GDP grew 15%, while the information sector grew 45%.
The rise of the Information Economy is driven primarily by the historic, and on-going, radical drop in computing costs.
Computing Costs Normalized to the iPad
[The cost to build an iPad’s worth of computing using historic computer technology]
Source: A Dozen Economic Facts About Innovation, August 2011, www.hamiltonproject.org
Demand follows price. Information processing technology has seen a decline in real costs that is unprecedented in the history of any product or service – and it continues. You would have had to spend $10,000 in 2000, $100 million in 1980, and $10 billion in 1960 to buy an iPad’s computing capability.
Computing and communications technologies now enter a new phase that Morgan Stanley calls the Mobile Internet.
The Next Explosive Phase of the Information Economy Begins
Source: Morgan Stanley
The new era is enabled by four intertwined macro trends that we’ll analyze in forthcoming Commentaries:
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Smart phones
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Smart things
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By 2003 more things than people on Earth were connected to the Internet. Within a decade IBM and Cisco forecast a trillion things will be connected. Any object, from lights and shoes, to doors and sphygmomanometers can have embedded logic and wireless connections.
| "While the voice communications gap has largely been closed through affordable prepaid mobile-telephone services, the key ICT challenge today is to bring more people online, especially from developing countries." Measuring the Information Society, 2011, UN International Telecommunications Union |
Global Wealth Correlates with Information Technology
SOURCE: United Nation’s International Telecommunications Union
Rising wealth is highly correlated with greater penetration and use of information & communications technologies (ICT). The United Nation’s International Telecommunications Union ICT Development Index (IDI) is a composite of 11 indicators capturing the various aspects of the deployment and availability of ICT.
The future prosperity for emerging economies is now no longer measured in just light-bulbs-per-capita (though that is still vital, and a vastly under-served market for billions of people), but also in bits-per-capita.
And while light bulbs, refrigerators and water pumps require massive power plants, information technologies require massive data centers that in turn require power. Lights require the Grid. Transistors require the Cloud, and more Grid. And more coal -- given the remarkable scale of demand created by more-transistors-than-grains-of-wheat.
Electric Demand Rises to Fuel the Cloud’s Data Centers
[Electric demand for data centers only]
Source: Microsoft
Data-center energy consumption already rivals energy use associated with global aviation. And while computing and storage technology efficiencies will continue to improve, total data center electricity use is forecast to grow rapidly.
- By 2020, the world’s data centers alone will consume over 1.5 trillion kWh of electricity. That totals more than the countries of Japan and Germany combined. According to the International Energy Agency forecast, that amount of electricity will supplied by almost 500 million more tons of coal per year.
The information economy consumes electricity directly and indirectly in numerous other ways not counted in the above graph: in the communications networks, in the manufacturing of transistors and information appliances, at the locations where consumers and businesses use that equipment, and in the IT-driven economic expansion of associated non-IT equipment in business and industries. All subjects for another day.
The Evolution of the Data Center – From Office Scale to Warehouse Scale
From 1960s IBM mainframe to… Apple’s warehouse-scale N.C. datacenter
1 Note: more detailed unbundling would expand the IT share of the economy; other 'buried' IT-centric activities should be extracted that are otherwise counted separately in the Census; e.g., for IT aspects of government and similar services, for air traffic control (counted as "transportation"), or for the share of electrical equipment manufactured that is exclusively used in powering ICT equipment, etc.