Will AI Energy Demand Taper Off?
Anyone following the AI boom will have heard two arguments pulling in opposite directions. The first says hardware and algorithms are improving so fast — chips getting quicker per watt, models shrinking through quantisation and distillation, software stacks tightening at every layer — that energy use should eventually level off. The second says the opposite: tech giants are signing multi-gigawatt power deals, bringing retired nuclear plants back online, and forecasting demand curves that only go up. I wanted to work out which story actually holds, so I went through the industry data myself. My conclusion is that the second camp has it right. Efficiency keeps improving, but it is not enough on its own. Total demand is going to keep accelerating for the rest of the decade. Why Efficiency Doesn't Mean Less Energy The reason the efficiency argument falls short has a name: Jevons' Paradox . Back in 1865, the economist William Stanley Jevons noticed something counterintuitive ab...