Ai Will Increase Data Centre Electricity Demand And Transform Energy Sector

AI is poised to drive a substantial increase in electricity demand from data centres, while revolutionising the energy sector globally up to the mid-2030s, according to a new report from the International Energy Agency (IEA).

Entitled Energy and AI, the report predicts electricity demand from AI-driven data centres to more than double to around 945 terawatt hours (TWh) by 2030.

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Based on extensive consultation with policymakers, the tech sector and international experts, the report emphasises that AI will be the primary driver of this surge.

The report highlights the transformative potential of AI in the energy sector by creating considerable opportunities to reduce costs, improve competitiveness and lower emissions.

Data centres are anticipated to drive more than 20% of global growth in electricity demand in advanced economies.

To meet this demand, a diverse range of energy sources will be utilised, with renewables and natural gas leading due to their cost-effectiveness.

In the US, data centres are expected to account for almost half of electricity demand growth by 2030, exceeding that used for manufacturing energy-intensive goods.

IEA executive director Fatih Birol stated: “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 United States, 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.”

According to the report, AI could both exacerbate and mitigate energy security issues, with cyberattacks on energy utilities tripling since 2020 due to the use of AI. However, AI is also becoming a crucial tool for defending against such threats.

While emissions from data centres are expected to rise, they may be offset by AI-driven emissions reductions if the technology is widely adopted.

AI’s role in accelerating innovation in energy technologies, such as batteries and solar photovoltaic, was also noted in the report.

The report urges countries to invest in electricity generation and grids, improve data centre efficiency and foster dialogue between policymakers, the tech sector and the energy industry.

“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,” Birol stated.

The IEA plans to launch an Observatory on Energy, AI and Data Centres to track AI’s electricity needs and applications.

It recently released a report stating that global electricity demand is expected to increase by 4% annually until 2027.