Rolling Blackouts by 2026
The global economy is going to be hit with a surge in electricity demand. Elon Musk has said that Artificial Intelligence (AI) and Electric Vehicles (EVs) will boost demand so much that there will be rolling blackouts in the United States by 2026.
The International Energy Agency (IEA) wrote:
“Electricity consumption from data centers, artificial intelligence (AI), and the cryptocurrency sector could double by 2026. Data centers are significant drivers of growth in electricity demand in many regions. After globally consuming an estimated 460 terawatt-hours (TWh) in 2022, data centers’ total electricity consumption could reach more than 1,000 TWh in 2026. This demand is roughly equivalent to the electricity consumption of Japan.”
China Sucks Watts
China is still growing demand around 7% per year. The country doesn’t produce much oil or natural gas. This means the country is focused on producing EVs in huge numbers and limiting its need for gasoline.
The flip side of this is that it requires a great deal of electricity. Much of that will come from nuclear power and other renewable sources but coal remains the mainstay of its electricity production.
Make no mistake, China is the world’s largest emitter of pollutants. However, It also has the world’s largest production of energy from renewable sources. Furthermore, China is burning more coal and building more coal plants than the rest of the world combined.
Yesterday, I told you about India’s booming stock market. You will have noticed that two of the three breakout stocks were in the power generation sector. India, like China, will expand its electricity generation and the majority of this growth will be from burning coal.
This brings us to the latest global bottleneck in shipping. We already have drought slowing down the Panama Canal, the Houthis bombing shipping in the Red Sea, and a dark fleet of Russian oil tankers.
Baltimore’s Key Bridge Fell
A few days ago a 1.6-mile bridge in Baltimore, named the Francis Scott Key Bridge, was destroyed after being hit by a massive cargo ship. The wreckage of this bridge sealed off the harbor and has blocked one-third of the U.S. coal exports.
Much of this coal is destined for India. In 2023, India imported 7.27 million tonnes of coal from the US. Baltimore coal won’t get there for at least a few months, and knowing Baltimore, it will be the better part of a year.
This means that coal prices will be going up and it will affect coal exporters from Indonesia to Australia.
What you may not know in this era of green energy hype is that coal has been in a stealth bull market all year. Just check out these gains. In comparison, NVIDIA (NVDA), the current market darling, is up 240% over the last year.
Next week I’ll give you one coal company that will benefit the most from the Baltimore Bridge catastrophe.
All the best,
Christian DeHaemer
Outsider Club
