AI to propel global data centre electricity demand by 2030

A new report from the IEA has highlighted AI’s role in boosting global data centre electricity demand by 2030. (Photo: Shutterstock)

A new report by the International Energy Agency (IEA) has outlined the significant impact that AI is expected to have on the energy sector over the next decade. The report, titled “Energy and AI,” predicts a sharp rise in electricity consumption by data centres worldwide, primarily driven by AI advancements. By 2030, these centres are projected to consume over 945 terawatt-hours (TWh) of electricity, which is more than Japan’s current total electricity consumption. The demand for electricity from AI-enhanced data centres is expected to increase fourfold within this timeframe.

In the US, data centres are anticipated to contribute nearly half of the growth in electricity demand by 2030. The report suggests that the US will use more electricity for data processing than for producing energy-intensive materials such as aluminium, steel, cement, and chemicals. In other advanced economies, data centres are expected to account for over 20% of the increase in electricity demand, reversing the previous trend of stagnant or declining demand in these regions.

“AI is one of the biggest stories in the energy world today – but until now, policymakers and markets lacked the tools to fully understand the wide-ranging impacts,” said the IEA’s executive director, Fatih Birol. “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.”

Renewables and natural gas to lead energy sources for expanding data centre needs

The report indicates that a mix of energy sources will be required to meet the growing electricity needs of data centres. Of these, renewables and natural gas are expected to play a leading role due to their cost-effectiveness and market availability. However, the report also identifies uncertainties, such as the economic outlook, the speed of AI adoption, improvements in efficiency, and potential challenges within the energy sector.

AI’s influence on energy security is noted as having both positive and negative aspects. While AI has enabled more advanced cyberattacks on energy utilities, it is also becoming crucial for protecting against these threats. The report also raises concerns about the increasing demand for critical minerals used in AI-driven data centre equipment, with current global supply being highly concentrated.

Furthermore, the report suggests that while the rise in electricity demand from data centres may increase emissions, this could be offset by emissions reductions facilitated by widespread AI use. AI’s potential to accelerate advancements in energy technologies, such as battery storage and solar photovoltaics, is also recognised.

To leverage AI’s potential, the report advises countries to invest in electricity generation and grid infrastructure, improve the efficiency and flexibility of data centres, and foster collaboration between policymakers, the technology sector, and the energy industry.

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