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Power is Power The chart below shows electricity prices in Europe just now, priced per MWh. Just horrific and economically ruinous for any modern economy. The world spends about $4.2 trillion on electricity and this is split between: • Generation (2/3 • Transmission & Distribution (1/3) The world spends around $1.5 trillion on capex and $2.7 trillion on opex. The $1.5 trillion capex gets you 1-2% capacity growth each year. So a rough rule of thumb is that every 1% of GDP you spend on power infrastructure gets you 1-2% more electricity. If you wanted to grow your power supply by eg 8%, you might expect that to cost 6% of GDP. Nobody has the supply chain to do that, if you want to grow this particular supply chain it will cost you more GDP points on second order things. Now… Demand for power around the world is booming, because of 3 big technology trends. 1. Air Conditioning (yes still) +20% consumption 2. Electric Vehicles +80% consumption 3. AI Data Centers +XYZ% consumption Different regions have different progress on these three trends. US has a lot of AC, little EV and a lot of DC, Europe has little AC, lots of EV little DC. China has a lot of AC and EV. Now generation splits into fixed costs for the generator plant (site and technology specific) and variable costs for fuel. Dispatchable Power Cost, by Fuel Type 1. $6 / MWh - Uranium 2. $19 / MWh - Nat Gas 🇺🇸 3. $22 / MWh - Coal 🇺🇸 4. $40 / MWh - Coal 🇨🇳 5. $90 / MWh - LNG 6. $130 / MWh - Biomass 7. $160 / MWh - Nat Gas 🇪🇺 🇯🇵 8. $200 / MWh - Oil Fracking has given the US a structural energy cost advantage. If you talk to people in China about what is the most impressive thing the US has done they say “fracking”. The challenge with US Nat Gas is that it’s now fully developed and expansion is sort of tapped out. What the 21st Century demands is a lot of power, you either have it or you don’t. When you look at planetary scale energy and compute trends you see myriad gigantic arbitrage opportunities. Interesting times!