Contrary to popular belief, recent electricity price hikes are not yet driven by AI demand. Instead, they reflect a system that had already become less reliable due to the retirement of dispatchable coal power and increased dependence on intermittent renewables. The grid was already tight before the current demand wave hit.

While solar panels are inexpensive, the total system cost to achieve 100% reliable, 24/7 coverage is massive. These "hidden costs"—enormous battery storage, transmission build-outs, and grid complexity—make the final price of a full solution comparable to nuclear. This is why hyperscalers are actively pursuing nuclear for their data centers.

The biggest challenge in energy isn't just generating power, but moving it efficiently. While transmission lines move power geographically, batteries "move" it temporally—from times of surplus to times of scarcity. This reframes batteries as a direct competitor to traditional grid infrastructure.

Base's core thesis is that the shift to solar and battery storage is inevitable not because of ESG trends, but because it represents the lowest marginal cost to add power to the grid. This economic argument is more fundamental and compelling than climate narratives alone.

Over the last 20 years in New England's restructured market, the primary driver of higher consumer electricity bills wasn't the cost of power itself, which fell 50% inflation-adjusted. Instead, the cost of transmission and delivery infrastructure skyrocketed by 900%, fundamentally shifting the composition of consumer bills.

A major flaw in the U.S. electricity system is its one-sided nature, where supply must constantly react to inelastic demand. Unlike the airline industry, which uses dynamic pricing to manage demand and achieve high "load factors," the power sector has failed to develop robust mechanisms for demand-side response, leading to inefficiency.

The U.S. has plenty of power for the AI boom, but it's in the wrong places—far from existing data centers, fiber networks, and population centers. The critical challenge is not generation capacity but rather bridging the geographical gap between where power is abundant and where it is needed.

Poorer countries, unburdened by legacy fossil fuel infrastructure, have a unique advantage. They can bypass the dirty development path of wealthy nations and build their energy systems directly on cheaper, more efficient renewable technologies, potentially achieving energy security and economic growth faster.

Charts showing plummeting solar and wind production costs are misleading. These technologies often remain uncompetitive without significant government subsidies. Furthermore, the high cost of grid connection and ensuring system reliability means their true all-in expense is far greater than component costs suggest.