Podcast Summary: Thoughts on the Market

Episode: "AI Sparks New Economics for Electricity"

Host: Mayank Maishwari, South Asia Energy Analyst, Morgan Stanley
Date: December 2, 2025

Overview

In this episode, Mayank Maishwari explores how artificial intelligence (AI) and widespread electrification are driving rapid, fundamental shifts in global electricity demand and the economics of power. He discusses the implications for power markets, investment trends, and key industries, emphasizing the scale of the transformation and the new opportunities and challenges ahead.

Key Discussion Points & Insights

1. AI and Electrification Driving Up Power Demand

• Rapid Growth: Global power consumption is increasing at its fastest pace in over a decade, expected to rise by more than 1 trillion kilowatt-hours (kWh) every year through 2030.
  • "Annual demand is set to rise by more than 1 trillion kWh every year through 2030, with AI driven data centers contributing nearly a fifth of that growth." [00:34]
• Data Centers as Major Contributors:
  • AI-powered data centers drive significant demand, expected to add about 126 gigawatts of power consumption from now until 2028.
  • "We estimate about $3 trillion investments in data centers by 2028... almost as large as Canada's total power consumption." [00:49]

2. Rising Power Prices and Spreads

• Investment & Higher Prices:
  • In 2024, global power sector investment hit a high of $1.5 trillion. Consumer power prices have increased approximately 15%.
  • "Consumer power prices had risen by about 15%." [01:17]
• Regional Trends:
  • By 2030, U.S. data center power use will represent half of global consumption in that sector, causing ripple effects in Asian markets.
  • "Asia will also see about a 15% spillover of that US hyperscaler demand..." [01:33]
• Profit Margins Expansion:
  • The difference between electricity sale price and generation cost ("power spreads") are expected to rise by nearly 15%, creating roughly $350 billion in new value across the supply chain.
  • "Power spreads... are likely to rise by nearly 15%. This expansion in profit margins could lead to higher earnings... and create $350 billion in value creation through the entire power supply chain." [01:47]

3. Investment Shifts and Technology Mix

• Grid Bottlenecks and Modernization:
  • Underinvestment in electric grids has resulted in bottlenecks, driving new waves of investment, particularly in natural gas infrastructure, energy storage (batteries), and renewables.
  • "Years of underinvestments in electric grids have led to bottlenecks, sparking a wave of new spending..." [02:16]
• Natural Gas’s Rising Role:
  • Gas investments reached record highs in 2024; by 2026, gas is poised to become a truly global source of new power generation, expected to meet one-fifth of new non-China demand.
  • "Gas is set to become a new truly global source of new power generation... expected to meet about a fifth of world's new power needs excluding China." [02:35]
• Renewables & Energy Storage:
  • Renewables adoption continues, with increased investment in batteries and nuclear, especially across data centers and in China.
  • "Nuclear energy is well positioned for increased investments, while batteries... are getting a new set in terms of new investments..." [02:50]

4. Structural Changes and Long-Term Opportunities

• Transformation of the Industry:
  • The power sector faces a multi-decade transformation, with collaboration across fossil and non-fossil resources, more dynamic pricing, and new market structures.
  • "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..." [03:10]
• Beneficiaries and Risks:
  • Sectors like gas, nuclear, energy storage, and fuel cell supply chains, particularly in Asia and the U.S., stand to benefit most from stronger pricing and growth.
  • Grid operators could see better returns due to higher investment.
  • In contrast, pure solar and wind producers may face rising costs, particularly in Asia, mirroring earlier trends in the U.S. and Europe.
  • "Pure solar and wind producers may continue to see rising costs in Asia..." [03:36]

5. The Core Challenge: Resilient and Flexible Grids

• The Bottom Line:
  • Managing rising demand isn’t just about adding more renewables, but building a resilient, flexible grid to navigate the evolving economics of energy.
  • "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." [04:07]

Notable Quotes & Memorable Moments

• On the staggering scale of AI-driven growth:
  • "AI driven data centers contributing nearly a fifth of that growth... 126 gigawatts in these three years till 28. This is almost as large as Canada's total power consumption..." [00:41]
• On investment and growing consumer impact:
  • "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%." [01:17]
• On industry opportunity and profit:
  • "This expansion in profit margins could lead to higher earnings forecast for power generation companies and create $350 billion in value creation through the entire power supply chain." [01:54]
• On future direction and adaptation:
  • "The real challenge isn't just adding renewables. It's about building a resilient flexible grid and navigating the new economics of energy." [04:07]

Timestamps for Key Segments

• [00:01] Introduction & Episode Framing
• [00:34] Surge in Power Demand & AI’s Impact
• [01:17] Investment and Price Increases
• [01:33] Regional Impacts: U.S. and Asia
• [01:47] Expanding Power Spreads & Value Creation
• [02:16] Grid Investment & Technology Modernization
• [02:35] Natural Gas and Energy Storage Trends
• [03:10] Industry Transformation and Market Changes
• [03:36] Sector Winners and Losers
• [04:07] The Challenge Ahead: Building a Flexible Grid

Summary

This episode delivers a concise yet impactful analysis of how AI and electrification are challenging established norms in the global power sector. With demand surging, massive investments on the horizon, and both opportunities and risks for different stakeholders, the conversation underscores the importance of modernizing grids and embracing innovative approaches to meet escalating needs. The key message: the game is changing, and resilience and flexibility are the new watchwords for the electricity industry’s future.