Jim Thompson

Email Jim at jim.thompson@ipulpmedia.com

Maybe I reflected this month's topic, Energy Trends, correctly in my columns. I have been all over the place with my writing, and, if you take the time to look out the window, or drive to Aunt Matilda's in Odessa, you will find energy trends are all over the place, too.

It seems like we have suddenly gone from a totally environmental focus, e.g. windmills and solar panels, to "WE NEED A LOT MORE ENERGY NOW!"

Hence mentioning Aunt Matilda in Odessa, slap dab in the middle of the Permian Basin in West Texas, where Texas Critical Data Centers, LLC has announced plans to build a "250MW net-zero energy" data center campus.

The closest paper mill to this is likely Graphic Packaging's newly started up behemoth in Waco (357 miles via decent highway). Thank goodness it will not be competing with any others.

The US electrical grid is broken into three sections. There is East, West, and Texas. Putting data centers in Texas makes good sense for there are other energy sources (such as the Natural Gas in the Permian Basin) and fewer regulators, since Texas is its own electrical grid.

The energy demand of the data centers will provide new competition for electricity all over the country. As I have mentioned before, Elon Musk has announced a new data center in Memphis. Without thinking too hard, I can think of five paper mills within two hundred miles of downtown Memphis. Who is going to win in a fight for scarce resources there? A glistening new, state-of-the art data center or a stinky old paper mill? We don't stand a chance.

But don't forget, I mentioned in this series this month that continued future shrinkage in size and heat generation of computer processing power may make these data centers obsolete by the mid-40's.

My vision is a gigantic surge in electricity demand caused by the data centers, with a sudden shrinkage in demand, caused by new, high-performance chips, about fifteen or twenty years from now.

But I bet then, like now, we will still be using bath tissue and kraft paper for packaging.

I hope I live to see it.

Be safe and we will talk next week.

For a deeper dive, go here.

Study Guide: Energy Trends, Data Centers, and Industrial Competition

This guide is designed to review and reinforce understanding of the provided text on contemporary energy trends, focusing on the rise of data centers and the resulting impact on industrial resource allocation.

Short-Answer Quiz

Instructions: Answer the following questions in two to three sentences, using only information provided in the source text.

1. Describe the primary shift in energy focus that the author has recently observed.
2. What specific project is being developed in the Permian Basin, and what company is responsible for it?
3. According to the author, what are the key advantages of building data centers in Texas?
4. What is the central conflict for resources that the author highlights in the Memphis area?
5. What future technological development does the author predict could make today's large data centers obsolete?
6. Summarize the author's long-term forecast for electricity demand over the next 15 to 20 years.
7. How does the text describe the structure of the US electrical grid?
8. When comparing a new data center to an old paper mill, what does the author predict will be the outcome of their competition for scarce resources?
9. What is the planned power capacity and energy classification of the new data center campus in West Texas?
10. Despite the projected technological shifts, which types of products does the author believe will persist?

Answer Key

1. The author notes a sudden shift from a total environmental focus, exemplified by windmills and solar panels, to an urgent demand for a large amount of energy now. This is characterized by the exclamation, "WE NEED A LOT MORE ENERGY NOW!"
2. In the Permian Basin near Odessa, Texas Critical Data Centers, LLC has announced plans to build a large data center campus. This new development will be a significant consumer of energy in the region.
3. Texas is an advantageous location for data centers because it has its own electrical grid, separate from the East and West grids. This results in fewer regulators and provides access to alternative energy sources like the natural gas available in the Permian Basin.
4. The author identifies a coming competition for scarce electricity between a new data center announced by Elon Musk and the five paper mills located within two hundred miles of downtown Memphis.
5. The author posits that continued future shrinkage in the size and heat generation of computer processing power may render current data centers obsolete. This would be driven by the development of new, high-performance chips.
6. The author's vision is for a gigantic surge in electricity demand caused by the construction of data centers, followed by a sudden shrinkage in that demand. This decline is expected to occur in about fifteen or twenty years due to new, more efficient chip technology.
7. The US electrical grid is described as being broken into three distinct sections. These sections are identified as East, West, and Texas, with Texas operating as its own unique grid.
8. The author predicts the paper mill will lose the competition for resources. In a fight between a "glistening new, state-of-the art data center" and a "stinky old paper mill," the author states, "We don't stand a chance."
9. The data center campus planned by Texas Critical Data Centers, LLC is designed to be a "250MW net-zero energy" facility.
10. The author bets that even with future technological changes, society will still be using basic paper goods. Specifically, the text mentions bath tissue and kraft paper for packaging as products that will endure.

Essay Questions

Instructions: The following questions are designed for a more in-depth, essay-style response. Use the source text to construct a comprehensive argument and support it with specific details.

1. Analyze the author's argument regarding the potential "boom and bust" cycle of electricity demand driven by data centers. What evidence is provided for both the initial surge and the eventual shrinkage?
2. Discuss the competitive dynamic between emerging technology sectors and established industries as presented in the text. How does the author frame this conflict, its key players, and its likely outcome?
3. Explain the strategic importance of the Texas electrical grid as described in the source. How do its structure and the state's resources create a unique environment for energy-intensive developments?
4. Evaluate the author's overall tone and perspective on the future of energy and industry. Is the outlook optimistic, pessimistic, or cautionary? Support your conclusion with specific quotes and references from the text.
5. The author contrasts the potential obsolescence of high-tech data centers with the enduring utility of paper products. What is the significance of this contrast within the article's broader discussion of energy and technological trends?

Glossary of Key Terms

Term Definition from Context

Data Center A facility that requires a massive amount of electricity to power computer processing. The text identifies new data centers as the primary driver of a surge in energy demand, with campuses being built by entities like Texas Critical Data Centers, LLC and Elon Musk.

Energy Trends The overarching topic of the column, described as being "all over the place." The primary trend discussed is the shift from an environmental focus (solar, wind) to a massive, immediate demand for more energy, driven by new technologies like data centers.

High-performance chips A future technology predicted by the author that will lead to computer processors with reduced size and heat generation. This advancement is expected to cause a "sudden shrinkage" in electricity demand by making current large-scale data centers obsolete by the mid-2040s.

Kraft Paper A type of paper used for packaging. The author mentions it alongside bath tissue as an example of a durable, essential product that will likely remain in use regardless of future technological shifts.

Net-zero energy A classification used to describe the data center campus planned by Texas Critical Data Centers, LLC. In this context, it implies a goal for the facility to operate with a minimal or balanced carbon footprint, despite its high energy consumption (250MW).

Permian Basin A geographical region in West Texas, containing the city of Odessa. It is identified as a source of natural gas and the chosen location for a new 250MW data center campus.

Texas Critical Data Centers, LLC The company that has announced plans to construct a "250MW net-zero energy" data center campus in the Permian Basin of West Texas.

US Electrical Grid The national infrastructure for electricity distribution. The text states it is broken into three sections: East, West, and Texas, highlighting that Texas operates its own grid with fewer regulators.

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