Data centres consume vast amounts of energy. (Image source: Adobe Stock)
The global electricity demand is on an unprecedented upward trajectory, fuelled by the rapid expansion of data centres essential for supporting energy-intensive advanced technologies, including artificial intelligence (AI)
Despite significant investments in alternative energy sources and global climate policies aimed at reducing carbon footprints, the unchecked energy consumption of data centres risks undermining these efforts. And this means the reliance on fossil fuels will continue, as renewable sources do not have the capacity to satisfy this demand.
A recent report by the International Energy Agency (IEA), titled “What the Data Centre and AI Boom Could Mean for the Energy Sector”, underscores the scale of the challenge. Investment in new data centres has surged, particularly in the United States, propelling electricity demand to unprecedented levels. The report predicts that by 2026, the electricity consumption of data centers, cryptocurrencies, and AI systems could reach 1,000 Terawatt Hours (TWh) – a figure comparable to Japan’s annual energy usage – up from the current 460 TWh.
The rapid adoption of advanced technologies looks to outpace the capacity of renewable energy sources to meet latent demand. While the expansion of renewable energy, particularly solar and wind power, has been a central focus of global energy strategies, these sources are not yet sufficient to meet the surging electricity demand from the tech sector. In response, many tech companies, particularly in the United States, are expected to turn to natural gas – a sector experiencing robust growth – as a primary energy source to power their operations.
At present, many tech companies operate data centres with a capacity of around 40 MW, but the coming years are set to see an acceleration in the size and energy demands of these facilities. By the time these companies begin constructing campuses of 250 MW or more, the energy requirements will be substantial – equivalent to the electricity needs of an entire mid-sized city. As a growing number of campuses of 500 MW or more emerge in the 2030s and 2040s, the demand for gas-generated electricity could surge, following years of national investment in a green transition. This shift could place further strain on global energy systems, especially in regions that are already grappling with the challenges of transitioning to a low-carbon economy.
Significant challenge
The extraordinary rise in electricity demand driven by data centres and AI technologies presents a significant challenge to global energy supply systems. As tech companies continue to expand their operations, the sheer scale of energy required to power these facilities will put immense pressure on existing infrastructure. Current projections suggest that the growing electricity needs of the tech industry could outstrip the capacity of renewable energy sources, particularly in regions where these technologies are rapidly developing. In the absence of effective regulation and investment in new energy solutions, there is a real risk that power shortages, grid instability, and rising energy prices could become commonplace.
For energy supply systems, this rapid rise in demand underscores the necessity for innovation in power generation, distribution, and storage. Power grids must evolve to meet the needs of an increasingly digital world, with greater flexibility and efficiency in handling variable loads from data centers and other large-scale users. Investment in energy infrastructure – both to expand capacity and enhance resilience – will be crucial to ensuring that demand can be met without compromising the reliability of energy services for other sectors.
Ultimately, balancing the growing demand for electricity with the availability of supply will require coordinated efforts across governments, industries, and energy providers. If the increasing energy consumption of data centres and AI technologies is not effectively managed, the resulting strain on the global energy system could have far-reaching consequences, including potential power shortages, rising costs, and challenges in meeting the needs of both the tech sector and the broader economy.
This article is authored by Synergy Consulting
