Despite the enormous productivity promise, AI expansion has obstacles related to power, resources, and safety: JP Morgan

AI Growth Faces Challenges From Power, Water and Safety Concerns: JP Morgan

The fast growth of artificial intelligence (AI) may slow down due to problems related to power supply, water availability, privacy and safety, according to a report by JP Morgan.

The report says that public opinion and government policies around these issues can both increase or reduce the financial value created by AI in the future.

One major challenge is electricity shortage. In the United States, companies may need to wait nearly five years to add new power generation capacity. Around 70% of regional power grids are already under pressure. Power demand is expected to rise sharply by 662 terawatt-hours by the end of this decade, mainly because of data centres and AI infrastructure.

The problem is made worse by old power infrastructure, as nearly 70% of transmission lines are over 25 years old, making it difficult to meet growing electricity needs.

As governments increasingly see AI as a national security issue, investment in power generation and transmission is expected to increase. However, the report warns that relying more on fossil fuels to meet short-term power demand could raise carbon emissions above earlier estimates. This may lead to higher global temperatures and more extreme weather events.

Water availability is another growing concern. Data centres need large amounts of water for cooling, and limited water supply in some regions could slow down the expansion of AI facilities.

The report also notes that AI could disrupt labour markets and increase the risk of a market bubble.

Overall, JP Morgan says that while AI has strong economic potential, its future growth will depend on how well governments and companies manage resource shortages, environmental risks, and safety concerns.