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AE Industry Dashboard > Volume 14 issue 4
AE Industry Dashboard: Volume 14, Issue 4
Bringing you snapshots of key market sectors, business management ideas, and must-know information for managing and leading your firm.
In This Issue
Market Watch
Technology Corner
The New Workplace
Market Watch
Energy-Guzzling AI Spurs Power, Data Center Work
Appetite for construction
For AE firms that serve the data center and energy sectors, artificial intelligence isn’t just transforming the ways in which they work. It’s also driving the markets they serve. Tech giants such as Amazon, Google, Meta, and Microsoft are building networks of data centers to house the vast computing power required by AI. According to RBN Energy, the number of U.S. data centers has nearly doubled from 2,700 in 2021 to 5,300 in 2024, and AI’s insatiable appetite for power is straining the existing electric grid and driving new energy generation and delivery projects.
Power up
With the International Energy Agency reporting that a single ChatGPT query requires nearly 10 times the electricity as a single Google search, the generative AI boom is spurring a power demand surge. Tudor, Pickering, Holt & Co. forecasts that data center electricity demand could nearly quadruple from its present 11 gigawatts to 42 gigawatts by 2030. Goldman Sachs Research projects that the share of U.S. electricity consumed by data centers will rise from 3% in 2022 to 8% in 2030 and that U.S. utilities will require a $50 billion investment in new generation capacity solely to power data centers.
Stepping on the gas
Big tech companies have pledged to rely on solar, wind, and other renewable energy sources to power their data centers. (Google, Microsoft, and Meta have promised to achieve net-zero carbon emissions by 2030 and Amazon by 2040.) However, since it could take years to build power lines to connect data center hubs to renewable sources, natural gas is filling the void. Goldman Sachs Research projects that natural gas will fuel 60% of U.S. data center power demand growth and renewables the other 40%. Among the numerous energy company executives forecasting significant new demand for natural gas because of AI, TC Energy CEO François Poirier told investors in July that he had never “seen such strong prospects for North American natural gas demand growth.”
Old Dominion, new projects
Northern Virginia, which hosts more data centers than the next five largest American markets combined, stands to be a particular hotspot for AI-driven projects. Dominion Energy Virginia reports that it’s experiencing its largest demand growth since the years following World War II, and it forecasts data center power needs to more than double between 2023 and 2030. The energy requirements of approved, but unbuilt, data center projects in Virginia equates to the electricity demand of 5.8 million homes—more than all the homes in the state.
Technology Corner
Step Aside, BYOD. BYOAI Has Arrived.
An emerging risk
Just when firms were getting a handle on the Bring Your Own Device (BYOD) trend, along comes a new workplace technology concern—Bring Your Own Artificial Intelligence (BYOAI). While cautious management teams are still dipping their toes in the AI waters, many employees have already taken the plunge and are using AI applications at work without formal corporate approval, which could be putting their companies at risk.
User data
According to the 2024 Work Trend Index Annual Report from Microsoft and LinkedIn, three-quarters (75%) of knowledge workers are using generative AI—with more than half beginning their use in the previous six months. The study revealed that 78% of AI users bring their own AI tools to work (with an even higher 80% at small- and medium-sized businesses). The BYOAI trend isn’t restricted to younger workers. While the study found that 85% of Gen Z employees are using unsanctioned AI applications at work, the figures are nearly as high for millennials (78%), Gen X (76%), and baby boomers (73%).
Seeking clarity
Workers are turning to BYOAI in part due to a lack of AI guidance from management teams. Only 15% of employees surveyed by Gallup in October 2024 said their companies had communicated a clear strategy for integrating AI technology into current business practices, and 60% of white-collar workers reported that their companies lacked policies for AI use.
Guardrail protections
In addition to work-quality concerns, BYOAI could expose firms to data security, copyright infringement, and legal risks. Companies can mitigate those risks by surveying employees on their current use of AI, curating a list of approved AI applications that meet corporate standards, and instituting an ongoing vetting process to evaluate AI programs in the future. Firms could also develop a comprehensive BYOAI policy with clear guidelines about responsible use and data security requirements and invest in AI training so employees are aware of benefits and risks of particular AI solutions. Regular meetings can also offer forums to discuss the latest AI developments and answer questions.
The New Workplace
Major Employers Pushing a Return to the Office
Call it a come back
The era of the flexible workplace isn’t ending, but a scan of recent business headlines reveals that the tide may be turning when it comes to remote work policies in companies outside the AE industry. In September, Amazon CEO Andrew Jassy announced that tens of thousands of employees must return to the office five days a week by January 2025. Dell, Walmart, Disney, and Salesforce are among other major employers enacting stricter return-to-office mandates. According to Placer.ai, which uses cellphone data to monitor visitation, nationwide office building visits in October 2024 hit their highest levels since February 2020, with office foot traffic increasing more than 10% year over year.
Forecasting change
A KPMG survey of 400 CEOs released in September 2024 found the vast majority (79%) predicting a “full” return of employees to the office in the next three years. That’s a big jump from 62% in the prior year’s survey, and it highlights what KPMG calls a “widening gap” between the expectations of executives and workers. While the shift reflects a cooling labor market in the overall economy—and reduced C-suite fears of losing employees and recruits to competitors because of remote work policies—it’s worth noting that a much tighter labor market persists in the AE industry.
Cup of joe and got to go
How do companies plan to enforce their stricter in-office mandates? When the 26,000 U.K. employees of PricewaterhouseCoopers return to the office three days a week in January 2025, the company plans to police the policy by monitoring workers’ locations, and it plans to share location data with employees on a monthly basis. Managing in-office attendance, though, can be a hassle, and some employees are pushing back against rigid mandates by honoring the letter—if not the spirit—of in-office rules. “Coffee badging,” where workers swipe their badges at the office and stay for a perfunctory meeting or cup of coffee before heading out early, has become the new “quiet quitting.” A LinkedIn News poll in June 2024 found 19% of respondents engaging in the practice.
Navigating the gulf
Any changes in remote work policies that aren’t considered carefully and communicated clearly risk widening the gulf between executives and staff. In the wake of Amazon’s return-to-the-office announcement, for example, 73% of its employees polled by Blind Workplace Insights said they were considering searching for a new job because of the policy.
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