Energy Predictions - Blogpost

 The sources describe the Current Energy Mix in the US as heavily reliant on fossil fuels, with significant predictions for a future energy outlook (2025+) dominated by solar power and batteries, leading to substantial changes in infrastructure and consumption patterns.

Current Energy Mix (US)

The US currently consumes approximately 100 quadrillion BTUs of energy per year. About 80% of this energy originates as coal, oil, or gas.

In terms of usage, roughly one-third of the total energy mix is used to serve the electrical grid. The sources also note that less than 1% of the US energy consumption is food, illustrating the country's immense energy wealth compared to pre-industrial societies.

Specifically regarding hydrocarbons, in 2025, most gas is used for electricity generation, while most oil is utilized for cars, trucks, ships, and aircraft.

Energy Predictions: Future Outlook (2025+)

The sources describe the current period as one of rapid energy transition, with a clear direction toward solar power and decentralized storage.

Primary Production Shift to Solar

The central prediction is that primary energy production will be mostly solar. This is driven by solar power's accelerating cost reduction, with the production-weighted learning rate being 48%. Module costs are falling up to 20% per year, which is twice the rate observed five years ago.

In contrast to solar's growth, coal is shrinking, and nuclear power is flat. Solar power is anticipated to locally feed the grid, provide power behind the meter, and support off-grid developments.

Batteries and Grid Shrinkage

The sources predict that batteries will be deployed everywhere, leading to a shrinkage of the traditional grid. Battery production is growing, and costs are plummeting.

Key predictions regarding batteries include:

• Deployment: Batteries will be deployed behind the meter, at the point of generation, and within the grid (e.g., in devices, vehicles, houses, power poles, substations, and schools).
• Market Shift: The growth of democratized battery ownership (such as the Tesla Powerwall) allows individual consumers to ensure power continuation and shifts market power away from monopoly electricity utilities. In this future, it will be less sensible to spend vast amounts trying to keep the distribution grid at 99.9% production, as consumers can choose their own battery size.
• Less Developed Markets Pointing the Way: Countries like Pakistan, which have transitioned most domestic power consumption to solar and batteries in about two years, exemplify this trend—analogous to the rise of cell phones replacing copper phone lines.

Changing Hydrocarbon Usage and Synthetic Fuels

The usage patterns for hydrocarbons are expected to change significantly. As solar continues to displace other primary electricity generators and electric cars dominate ground transportation growth, the demand for conventional fuels will shift.

• Synthetic Fuel Abundance: Synthetic fuel production, created by converting cheap solar power, air, and water into synthetic natural gas and other hydrocarbons, is seen as the path to chemical energy abundance. The process involves using lime-calcite captured CO2 and electrolyzed H2 to create methane (CH4) and methanol (CH3OH). The cost reductions in solar are predicted to make this process cost-preferred over geological oil and gas in all import markets within the next five years.
• Future Hydrocarbon Roles (By 2045): Natural gas will be primarily used as LNG for high-performance supersonic aviation, shipping, and industrial heat. Methanol will become the universal industrial chemical precursor for specialty fuels, plastics, paints, fertilizers, and adhesives. Kerosene will remain to service the legacy aviation fleet.

Datacenters as Power Nexus

Datacenters are predicted to become central to electricity production growth. While headlines in 2025 might focus on datacenters pushing prices up, the sources argue that they are exposing weaknesses in the existing power generation industry.

• Captive Power: As demand from Artificial Intelligence (AI) grows, hyperscalers will turn to offgrid solar-plus-battery power systems, which are already competitive in sunny regions. Captive solar power plants will be built by datacenters.
• Net Power Sources: These captive solar plants, which will curtail approximately 75% of their generated power, will be able to provide net power to their communities 99% of the time. The utilization rate of these systems will be substantially higher than conventional thermal power plants. This shift means datacenters will become the preferred load growth power generation partner, providing consumers access to extremely competitive (cheap) power most of the time.

Seasonal Storage Solution (Beyond Batteries)

Addressing the winter load increase in cold climates—where solar power is reduced and heating demands rise—the sources note that current battery technology is marginal for seasonal power storage. Instead of relying on conventional methods like radically cheaper batteries or expanded solar overbuild, the insight is that storing electricity for months is difficult, but storing heat is easy.

• Thermal Energy Storage: Ultra-low-cost thermal energy storage systems, such as blowing hot air into a large pile of sand during the summer (when power is cheap and abundant) and extracting the heat in winter, are proposed as an alternative. This method, likened to artificial geothermal power storage, can be cheaply built and renewed.

The overall transition suggests that the US, currently relying heavily on coal, oil, and gas, will move towards a future where energy is dominated by solar, managed by decentralized batteries, and supplemented by synthetic fuels for specific applications, fundamentally changing how energy is produced, stored, and priced. This future envisions a world where energy, driven by solar's infinite power and Earth's silicon crust, becomes copious and cheap.

The sources indicate that the Primary Production Transition, in the context of the Energy Predictions: Future Outlook (2025+), will be decisively focused on solar power while resulting in significant changes to hydrocarbon use and electricity infrastructure.

Solar Dominance in Primary Production

The sources clearly state that the future of primary energy production "will be mostly solar". This transition is driven by solar power's accelerating cost reduction.

• Cost Reductions: Solar is "decosting at an accelerating rate". The sources note that the production-weighted learning rate for solar is 48%. Module costs are falling by up to 20% per year, which is twice the rate observed five years ago.
• Displacement of Competitors: While solar power grows rapidly, coal is shrinking, and nuclear power is flat. The direction of this shift is unmistakable.
• Usage: Solar power production will serve multiple roles: locally feeding the grid, providing power behind the meter, and supporting off-grid developments.

Impact on Energy Infrastructure and Consumption

This transition to solar as the primary source of production leads to related predictions about infrastructure, storage, and consumption patterns:

• Grid Shrinkage due to Batteries: Despite the growth of solar production, the sources argue against the need for drastically expanding the grid to manage renewables. Instead, the proliferation of batteries everywhere—from devices and vehicles to houses and substations—will cause the traditional grid to shrink. Since batteries are winning and their costs continue to plummet, consumers will have independent assurance of power continuation, making it less sensible to spend vast sums attempting to keep the distribution grid at 99.9% production.
• Datacenters Driving Solar Adoption: Datacenters, driven by AI demand, are predicted to accelerate the transition by building their own captive power plants, specifically offgrid solar-plus-battery power systems. These systems are already competitive with pure gas or gas-plus-solar in sunny regions. These captive solar plants will often be overbuilt, curtailing about 75% of their generated power, and will be able to provide net power to their communities 99% of the time. This means datacenters will become preferred partners for load growth power generation, offering consumers access to cheap power most of the time.
• Hydrocarbon Displacement and Synthetic Fuels: The widespread transition to cheap solar power enables the creation of synthetic fuels, which the sources describe as the path to chemical energy abundance. The cost reductions in solar are predicted to drive the synthetic fuel production process (converting cheap solar power, air, and water into hydrocarbons) to be cost-preferred over geological oil and gas in all import markets within the next five years. This synthetic path uses lime-calcite captured CO2 and electrolyzed H2 to create methane (CH4) and methanol (CH3OH).
• Future Hydrocarbon Roles: As solar displaces primary electricity generation and electric vehicles dominate ground transportation growth, hydrocarbon usage patterns will change significantly. By 2045, natural gas will be primarily used for high-performance supersonic aviation, shipping, and industrial heat, while methanol will become the universal industrial chemical precursor for specialty fuels, plastics, and fertilizers.

The fundamental basis for this primary production transition is the recognition that the world has been given an "infinitely powerful sun and a planetary crust composed largely of silicon," suggesting that copious and cheap energy is the inevitable outcome.

The sources present datacenters (DCs) as a crucial Power Nexus in the Energy Predictions: Future Outlook (2025+), acting both as a massive demand driver and, ultimately, a significant provider of cheap community power through captive solar-plus-battery systems.

Datacenters Exposing Industry Weakness

In the near term (around 2025), headlines are expected to "scream that datacenters are pushing prices up and consuming all the power". The sources argue, however, that datacenters are actually exposing the "rot" in a "moribund power generation and delivery industry" that has failed to meet demand in recent years. This suggests that existing infrastructure is already inadequate, and DC demand merely highlights this issue.

The Shift to Captive, Off-Grid Systems

As the demand for Artificial Intelligence (AI) compute rapidly increases, traditional power generation methods—like the production of gas turbines—cannot keep pace. This forces hyperscalers (the operators of large datacenters) to pivot toward building their own generation capacity:

• Self-Sufficiency: Datacenters are already building their "own captive power plants".
• Off-Grid Systems: Hyperscalers will specifically turn to offgrid solar-plus-battery power systems, which are already competitive with pure gas or gas-plus-solar in sunnier regions of the Earth.
• High Reliability Design: These systems will utilize a 10x overbuild of solar and batteries to achieve high reliability, reaching greater than 99.5% uptime for the GPUs.

Datacenters as Net Power Sources for Communities

The most significant prediction regarding datacenters as a nexus of power production is their projected role as net power sources for their communities:

• Curtailment and Availability: These captive solar plants, designed for high reliability, will be curtailing approximately 75% of their generated power. Despite this curtailment, the systems will be able to provide net power on all but a few days per year, equating to 99% of the time. This utilization rate is "substantially higher utilization than any conventional thermal power plant".
• Market Power Flip: The sources predict that within the next five years, the market power between utilities and datacenters will flip. Datacenters will become the "preferred load growth power generation partner" for communities.
• Cheap Consumer Power: The implication of this shift is that consumers will gain access to "extremely competitive (cheap) power most of the time". Utility-owned and privately owned batteries will then be necessary to smooth out the remaining gaps.

Technical Optimization (Pure DC Systems)

Looking ahead, the sources suggest that datacenter power systems will evolve to become even more efficient by embracing direct current (DC) systems:

• Efficiency Drivers: Because solar PV modules are approximate constant current sources and lithium-ion batteries are approximate constant voltage sources, and GPU power consumption scales rapidly, optimizing the system by removing unnecessary conversions is logical.
• Ultimate Configuration: The ultimate configuration for solar datacenters will be "pure DC constant voltage systems", reducing the need for multiple DC-DC converters and inverters.

In essence, the sources predict that datacenters will transition from being massive burdens on the aging grid to being highly effective, decentralized solar power plants that democratize access to cheap electricity for the surrounding community. This mirrors the general outlook for primary production becoming mostly solar, with deployment shifting away from centralized utility control to points of generation and consumption.

The sources analyze Seasonal Load Variation and Storage in the context of the Energy Predictions: Future Outlook (2025+) by distinguishing between summer and winter challenges and proposing thermal storage as the solution for long-duration seasonal needs.

Seasonal Load Variation

The sources identify two primary seasonal load challenges:

1. Summer Load Variation: This is considered a "complete non-issue" in the future energy landscape. Increased loads during hot climates are primarily due to air conditioning (AC). Because solar power systems also produce more power during the hottest summer days, the supply naturally aligns with the demand. The sources suggest that suburban houses can "easily run their own ACs off rooftop solar", implying that no expansion of power distribution capacity is necessary to handle summer cooling demands.
2. Winter Load Variation: This is significantly more challenging, as nearly all winter load increase occurs in cold climates where heating is required, and these regions simultaneously "suffer a reduction of solar power".

Storage Solutions for Winter Load (Seasonal Storage)

Addressing the winter challenge requires energy storage capable of bridging seasonal gaps, but current battery technology is deemed "marginal for seasonal power storage".

The sources outline the issues with conventional wisdom regarding winter storage:

• Conventional Difficulties: Conventional solutions would require radically cheaper batteries, greatly expanded overbuild of solar or wind generation, continued burning of fuel for heat in winter, or building winter-only power plants. These winter-only power plants would suffer from the "same terrible utilization economics" as seasonal-only batteries.

Instead of relying on electrical storage, the key insight presented is that while "storing electricity for months is economically difficult, but storing heat is easy".

• Thermal Energy Storage: The proposed solution is ultra-low-cost thermal energy storage systems. This involves a system that uses abundant, cheap summer power to blow hot air into a "large pile of sand" (or another self-insulating medium).
• Heat Extraction: In winter, when the stored energy is needed, the fan reverses direction to extract the stored heat.
• Advantages: This method, described as "artificial geothermal power storage," offers advantages over actual geothermal power, including the ability to cheaply build and renew stored power.

While heat pumps can achieve higher efficiency, their consumer uptake has been low because most homeowners are "unwilling to make a 20 year bet on future power prices". The thermal energy storage method focuses instead on cheap, massive heat storage to solve the seasonal load problem driven by heating demands in cold climates.

The sources predict a significant Market and Governance Evolution in the Energy Predictions: Future Outlook (2025+), characterized by market power shifting away from centralized utilities, the necessary implementation of real-time pricing, and a bifurcation of regulatory approaches.

Shift in Market Power and Decentralization

The foundational change driving market evolution is the widespread adoption of batteries and decentralized solar production:

• Democratization of Power: The growth of democratized battery ownership (such as the Tesla Powerwall) allows consumers to have "granular, independent assurance of power continuation". In a future where every consumer chooses their own battery size, it is no longer sensible to spend vast amounts trying to keep the distribution grid at 99.9% production.
• Utility Loss of Control: This trend shifts value and market power from the monopoly electricity utility to "amorphous confederations of illegible behind-the-meter demand in the form of networked batteries".
• Datacenters as New Partners: This shift is accelerated by datacenters (DCs), which are building captive solar-plus-battery power systems and becoming net power sources for their communities. The market power between utilities and datacenters is predicted to flip within the next five years, positioning DCs as the "preferred load growth power generation partner". This competition will provide consumers access to "extremely competitive (cheap) power most of the time".

Governance and Pricing Reforms

The sources emphasize that effective governance will require adopting responsive, market-based pricing schemes:

• Need for Real-Time Pricing: Electricity power markets "should evolve toward real time and local prices". Responsive time- and location-based pricing is necessary for the real-time matching of supply and demand.
• Consequences of Unphysical Pricing: Regulatory insistence on "unphysical pricing schemes" is a deliberate choice to "socialize the costs of pathological markets". In markets that are opaque or non-existent, or have unresponsive prices, capital allocation will be less optimal, which drives costs higher and increases the potential for price arbitrage.

Bifurcation of Regulatory Regimes

The sources explicitly predict that electricity governance markets will bifurcate (split into two distinct paths):

1. Embracing Competition: One path will see governments "embrace a steady cadence of pricing reforms," allowing effective competition among many private operators of generation, storage, and transmission assets. This approach is expected to push prices down for consumers.
2. Desperate Measures: The other path will involve increasing prices for consumers, which will drive "increasingly desperate governance measures". These measures will allow less competitive storage operators to "extract vast rents" by leveraging the difference between real-world power conditions and conditions approximated by the legal framework.

The overall message is that while the physical reality of abundant cheap energy is inevitable due to the "infinitely powerful sun and a planetary crust composed largely of silicon," how regulators and market structures evolve will determine whether consumers benefit from this cheap energy or if regulatory failures allow incumbents to extract rents.

This predicted evolution is akin to the telecommunications industry's shift in developing countries, where the decentralized and cheaper cell phone technology bypassed the need for expensive, centralized copper phone line infrastructure, demonstrating how new technology puts market power into the hands of individual consumers.

The sources detail several crucial Other Global Implications stemming from the transition to solar dominance and ultracheap power within the Energy Predictions: Future Outlook (2025+)}, especially concerning resource reliance, infrastructure development, and geographical transformation.

End of Global Reliance on Geological Hydrocarbons

The predicted success of synthetic fuels has profound implications for global energy trade and importing nations:

• Cost Preference: The ongoing cost reductions in solar power are predicted to make the process of converting cheap solar power, air, and water into synthetic natural gas and other hydrocarbons cost-preferred in all hydrocarbon import markets within the next five years.
• Obsolescence of Drilling: This development means that geological sources of oil and gas will "never again be able to compete". Future generations are predicted to be "swimming in copious cheap energy" and questioning the need for previous drilling efforts.
• Methanol as Global Precursor: Within this future, methanol (CH3OH) is expected to become the universal industrial chemical precursor globally for plastics, paints, fertilizers, adhesives, and specialty fuels.

Decentralization and Bypassing Legacy Infrastructure

The transition demonstrates that less developed markets can rapidly adopt the new energy paradigm, bypassing expensive, centralized infrastructure:

• Rapid Adoption: Countries like Pakistan are pointing the way by transitioning most domestic power consumption over to solar and batteries in approximately two years.
• Analogy to Telecom: This rapid decentralization is analogous to the growth of cell phones in developing countries, which allowed them to bypass running copper phone lines to every house. This trend shifts market power away from monopoly utilities toward decentralized, networked batteries owned by individual consumers.

Geographical and Resource Transformations

Ultracheap solar power is expected to physically transform certain global regions and radically alter resource extraction processes:

• Revolutionizing Mining: Ultracheap solar power is predicted to change the global mining industry. Since common rocks like basalt contain essentially every metal desired (as metal oxides), there will be no need to travel to the ends of the Earth for mines. Instead, one can build a solar-powered rock refinery at a local gravel pit.
• Desert Irrigation: Democratized solar desalination technology offers the ability to turn vast coastal desert regions into "arbitrarily lush paradises". This applies to areas such as the coasts of Australia, Chile, Peru, Namibia, South Africa, Mexico, Saudi Arabia, and other gulf states, which possess essentially infinite quantities of cheap land, free solar power, and seawater.

Unique Regional Challenges (The UK)

The sources highlight a critical exception to the global solar potential:

• UK's Unique Challenge: The United Kingdom is identified as the only highly populated industrial country that is unable to trivially meet its electricity and synthetic fuel needs with solar alone, primarily due to its high population density and high latitude.
• Strategic Choice: This forces the UK to make a critical strategic decision: whether it wants a future where energy is cheap and the nation is rich, or a future where energy is expensive and the nation is poor. To achieve the former, the sources emphasize the necessity of getting serious about the large-scale deployment of wind power at prices as low as $10/MWh.