Electricity Demand from Data Centres to Double by 2030

The International Energy Agency (IEA) on Thursday predicted that electricity demand from data centres worldwide is set to more than double by 2030 to around 945 terawatt-hours (TWh), slightly more than the entire electricity consumption of Japan as on today.

Artificial Intelligence (AI) will be the most significant driver of this increase, with electricity demand from AI-optimised data centres projected to more than quadruple by 2030, the IEA said in its latest report.

In the US, power consumption by data centres is on course to account for almost half of the growth in electricity demand between now and 2030. Driven by AI use, the US economy is set to consume more electricity in 2030 for processing data than for manufacturing all energy-intensive goods combined, including aluminium, steel, cement and chemicals.

“In advanced economies more broadly, data centres are projected to drive more than 20% of the growth in electricity demand between now and 2030, putting the power sector in those economies back on a growth footing after years of stagnating or declining demand in many of them,” the IEA said.

A diverse range of energy sources will be tapped to meet data centres’ rising electricity needs, according to the report – though renewables and natural gas are set to take the lead due to their cost-competitiveness and availability in key markets.

IEA Executive Director Fatih Birol said that AI is one of the biggest stories in the energy world today – but until now, policy makers and markets lacked the tools to fully understand the wide-ranging impacts.

“Global electricity demand from data centres is set to more than double over the next five years, consuming as much electricity by 2030 as the whole of Japan does today. The effects will be particularly strong in some countries. For example, in the US, data centres are on course to account for almost half of the growth in electricity demand; in Japan, more than half; and in Malaysia, as much as one-fifth,” he said.

The report emphasises the significant uncertainties that remain, from the macroeconomic outlook to how quickly AI will be adopted. It also notes questions over how capable and productive AI will become, how fast efficiency improvements will occur, and whether bottlenecks in the energy sector can be resolved.

AI Is Critical Tool                  

According to the report, AI could intensify some energy security strains while helping to address others. Cyberattacks on energy utilities have tripled in the past four years and become more sophisticated because of AI.

At the same time, AI is becoming a critical tool for energy companies to defend against such attacks. Another energy security concern relates to the expanding demand for critical minerals used in the equipment in the data centres that power AI.

While the increase in electricity demand for data centres is set to drive up emissions, this increase will be small in the context of the overall energy sector and could potentially be offset by emissions reductions enabled by AI if adoption of the technology is widespread, the report said.

“With the rise of AI, the energy sector is at the forefront of one of the most important technological revolutions of our time,” Dr Birol said.

He added: “AI is a tool, potentially an incredibly powerful one, but it is up to us – our societies, governments and companies – how we use it. The IEA will continue to provide the data, analysis and forums for dialogue to help policy makers and other stakeholders navigate the path ahead as the energy sector shapes the future of AI – and AI shapes the future of energy.”