AI Boom Will Cause Data Centre Electricity Demand to Double

IEA Expects Global Electricity Demand, Driven by AI Growth, to Double by 2026 - Citing the Importance of Sustainability and Net Zero Investments

As AI and other new technologies continue to be in high demand worldwide, the data centres that facilitate this growth will double their electricity consumption in just two years.

The International Energy Agency (IEA) has forecast what energy demand could look like between 2024 and 2026. It has revealed that, whilst global electricity demand rose considerably in 2023, it is set to grow at a much faster pace in the next two years.

Considering the impact on data centre sectors, industry leaders will need to consider how to keep pace with continued rising demand for AI, by boosting capacity in a way that is economically viable and sustainable.

Global electricity demand continues rising in line with AI

With AI expected to consume as much electricity as a medium-sized country, the technology could pose severe challenges to data centres, as they battle to meet growing customer needs.

Global demand for electricity grew 2.2% in 2023, according to the IEA, with countries such as The People’s Republic of China and India experiencing transformative digital growth. Over the next three years (2024-2026), the need for electricity is set to grow by an annual average of 3.4%, which the IEA puts down to economic outlooks improving in both advanced and emerging economies.

Particularly in locations like China, electricity demand will be supported by the ongoing electrification of residential and transport sectors, as well as notable expansions of the data centre sector. China has already seen huge growth in its data centre capabilities, having recently launched its first underwater data centre in order to deploy innovative cooling solutions and increase overall energy efficiencies.

The country’s data centre market is also expected to reach revenue heights of US$69bn by the end of 2023, in addition to a market volume of US$86bn by 2027, demonstrating continued data centre demand around the world.

Also experiencing mass demand for data centre electricity is the Republic of Ireland, with the nation’s data centre electricity having risen by 400%. Figures in 2023 suggested that this was due to multinational companies such as Facebook, Google and Microsoft having built data centres in the country, with more expected in the future.

Ensuring that electrification is sustainable

IEA also reports that the share of electricity in final energy consumption is estimated to have reached 20% in 2023, having increased from 18% in 2015. With this in mind, the report highlights that electrification must accelerate rapidly to meet the world’s decarbonisation targets. 

In the IEA’s Net Zero Emissions by 2050 Scenario, a pathway aligned with limiting global warming to 1.5°C. At the time, it highlighted that, in order to reach Net Zero emissions by 2050, annual clean energy investment worldwide will need to more than triple by 2030 to around US$4tn.

Electricity consumption from data centres, AI and the cryptocurrency sector could double by 2026. After globally consuming an estimated 460 terawatt-hours (TWh) in 2022, data centres’ total electricity consumption could reach more than 1 000 TWh in 2026, according to the IEA, citing that the demand is roughly equivalent to the electricity consumption of Japan. 

With data centres contributing to significant electricity demand worldwide, increasing numbers of facilities are looking to implement greater sustainability strategies. 

In order to meet Net Zero emissions targets, or other sustainability goals, data centre businesses will need to make significant investments in energy efficiency measures. Some of these key areas could include upgrading IT equipment to be more energy-efficient, which could include servers, storage devices and networking equipment.

Additionally, relying on new technologies such as cooling could help to consolidate workloads. The IEA states that updated regulations will be crucial in order to moderate surging energy consumption from data centres. 

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