At the World Economic Forum in Davos 2026, Microsoft CEO Satya Nadella delivered a crucial message for countries and businesses racing to dominate artificial intelligence: energy costs may determine the winners of the AI revolution.
Why Energy Matters for AI
AI systems, especially the large language and generative models, require enormous computing power. This translates into massive electricity consumption. Nadella emphasized that countries with cheaper and more reliable energy will have a strategic advantage, as they can run AI workloads more efficiently and scale innovation faster.
Think of AI processing as a new kind of economic commodity. Just as electricity powers industries, AI “tokens” or computations are now central to global competitiveness. Countries that can minimize energy costs will naturally attract more investment and technological growth.
Real-World Impact Is Key
Nadella also stressed that AI must deliver tangible benefits in sectors like healthcare, education, and public services. If society sees AI as an energy-hungry tool without real-world advantages, public trust and regulatory support could weaken — a factor he calls maintaining “social permission” for AI.
Energy Infrastructure Is Now Strategic
The discussions at Davos highlighted that energy security is no longer a background concern. Supporting AI growth requires robust infrastructure and diverse energy sources. Countries investing in these areas are positioning themselves as future hubs of AI innovation.
The Bigger Picture
The takeaway is clear: AI success isn’t just about talent or technology; it’s also about energy strategy. Nations that combine affordable electricity with strong AI infrastructure will likely lead the next wave of economic growth and technological influence.
For New Zealand, this serves as a wake-up call to invest in energy efficiency, renewable power, and AI-ready infrastructure, ensuring the country stays competitive in the global tech landscape.
FAQs
Q1. Why does AI need so much energy?
Large AI models process billions of calculations per second, requiring massive computing resources, which consume enormous amounts of electricity.
Q2. How can countries reduce AI energy costs?
Investing in renewable energy, efficient data centers, and smart energy infrastructure can make AI operations more cost-effective.
Q3. What is “social permission” in AI?
It refers to public trust and regulatory support. AI must show real-world benefits to maintain acceptance.
Disclaimer: This article is based on statements and discussions from the World Economic Forum 2026 and aims to inform readers about AI and energy trends.
