How Data Centres Drive Surge in Global Energy Demand

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Backstone's 2024 decarbonisation summit. Credit: Blackstone
Blackstone's US$1bn Potomac Energy Center buy signals power surge for AI, highlighting critical data centre infrastructure needs in Virginia's tech hub

Never has the demand for reliable power been more critical.

According to the International Energy Agency (IEA), global electricity demand is anticipated to increase significantly.

Previously growing at 2.5% in 2023, it is now expected to advance by around 4% annually until 2026.

A key driver of this surge is the expanding relationship between data centres and energy infrastructures.The recent US$1bn acquisition of the Potomac Energy Center in Virginia, USA by Blackstone underscores the evolving dynamics of this relationship.

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The 774MW natural gas-fired power facility is strategically positioned in Loudoun County, the epicentre of the world's most substantial aggregation of data centres — known as Data Center Alley.

This plant, therefore, is not just a power station, but a pivotal piece in the critical digital infrastructure supporting vast amounts of global data traffic.

Energy demand spurs infrastructure development

Loudoun County, recognised globally for its data centre infrastructure, spans more than 30 million square feet with 200 operational data centres and 117 more planned.

It processes more than a third of all internet traffic worldwide.

Blackstone's investment is a reflection of the burgeoning demand for reliable power, fuelled by extensive data centre expansion, especially those accommodating burgeoning AI technologies.

The demand for data centre power is projected to rise dramatically, with forecasts like those from Goldman Sachs estimating a 160% increase by 2030.

This surge would rank the data centre sector among the top ten global power consumers.

Currently, data centres consume between 1% and 2% of global power.

“This investment underscores Blackstone’s commitment to investing in the electric infrastructure required to power AI innovation,” Bilal Khan, Senior Managing Director of Blackstone Energy Transition Partners, says.

Bilal Khan, Senior Managing Director of Blackstone Energy Transition Partners

“We believe Potomac is well-positioned to help meet data centre-driven power demand growth in Northern Virginia.”

Mark Zhu, Managing Director at Blackstone Energy Transition Partners, adds: “We are particularly excited about this investment given the opportunity to supply reliable, baseload power to the region. 

Mark Zhu, Managing Director at Blackstone Energy Transition Partners

“Potomac is one of the most efficient gas power plants in the region and has the potential to integrate a hydrogen fuel blend in the future, which could provide future environmental benefits.”

Adapting infrastructure for future energy needs

With increasing digitalisation and adoption of AI technologies, energy infrastructure is not merely expanding but also evolving.

New approaches are integrating renewable energy sources such as solar and wind alongside traditional power offerings.

This includes the enhancement of transmission lines and smarter grid management technologies, which are crucial for handling increased energy loads.

Data centres themselves are transforming, with operators increasingly focusing on energy-efficient designs to optimise power usage.

“Surging adoption of digitalisation and AI technologies has amplified the demand for data centres across the United States,” McKinsey says.

Data Centres in Virginia. Credit: Virginia Economic Development Partnership

“To keep pace with the current rate of adoption, the power needs of data centres are expected to grow to about three times higher than current capacity by the end of the decade, going from between 3% and 4% of total US power demand today to between 11% and 12% in 2030.

“The power sector is rapidly becoming a protagonist in the AI story. Access to power has become a critical factor in driving new data centre builds. 

“As the power ecosystem grapples with meeting data centres’ voracious need for power, it faces substantial constraints, including limitations on reliable power sources, sustainability of power, upstream infrastructure for power access, power equipment within data centres and electrical trade workers to build out facilities and infrastructure.”

Indeed, the power sector is key in supporting the continued expansion of digital and AI technologies.

Without robust investments in both data centres and associated energy infrastructure, the full potential of AI technologies may remain unrealised.

Investments and innovations: The road ahead

The ongoing growth in data processing and AI capabilities is likely to spur further investments in energy production facilities near key data centre hubs.

These developments are critical in supporting the burgeoning digital economy, highlighting the innovation needed to cater to the escalating power demands of the future.

As the data centre capital of the world, Northern Virginia is poised to lead these developments, continuously shaping the intersection of energy and technology sectors.

The synergy between power plants and data centres in regions like Loudoun County could well serve as a template for others aiming to navigate the intricate landscape of digital economy and energy challenges.


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