Is Data Centre Demand Driving 2025’s Global Energy Pressure?
Generation’s new Sustainability Trends Report examines the major climate and energy shifts of 2025 and highlights how rising demand from data centres is colliding with a rapidly changing global energy system.
Although the report spans politics, transport and finance, many of its findings point to a profound pressure point for infrastructure planners: electricity demand is climbing faster than expected, and data centres are now a central factor.
The report opens with a stark assessment of global climate politics, describing a “period of retrenchment” driven by the re-elected Trump administration.
The US has withdrawn from the Paris Agreement and moved to limit the federal government’s authority to regulate greenhouse gases.
Generation estimates these reversals have already cancelled nearly US$30bn of prospective clean industry investment, with lost investment possibly reaching US$500bn over a decade if current modelling holds.
Power strain intensifies as demand climbs
Across markets, clean technologies are scaling, but Generation stresses that electricity consumption is rising at close to 4% annually.
The report attributes this to the combined growth of EVs, heat pumps, data centres and air conditioning systems.
The rise in data centre development, fuelled by AI and high-density compute, is specifically called out as one of the drivers pushing global electricity demand to new record levels.
This rapid load growth is slowing the decline of fossil generation. Coal’s share of the global mix is shrinking, yet the absolute amount burned is close to historic highs because overall demand is so strong.
In China and India, coal plants remain heavily utilised even as both countries accelerate renewable energy deployment.
Solar and battery storage continue to lead new energy installations. Global solar generation rose 28.3%, with China adding more capacity in a single month than any other country has ever built in an entire year.
Battery systems are shifting the shape of the grid in markets such as California, where storage now meets roughly 20% of peak evening demand on some days. But Generation notes that even these gains are being absorbed by rising load requirements.
A shifting geopolitical landscape
The report argues that China is emerging as the leading force in clean technology because of an assertive industrial strategy and soaring exports of renewables and electric vehicles.
China’s emissions may be nearing their peak ahead of its 2030 target, and Generation labels the country a potential “electrostate”.
By contrast, the US is falling behind. Electric vehicles made up around 10% of US car sales in 2024, compared with nearly 60% in China and about a quarter across Europe.
Meanwhile, cancellations and delays driven by policy reversals are affecting investment decisions across clean energy manufacturing and industrial projects.
Infrastructure gaps widen
The report’s findings on heavy duty transport infrastructure are also relevant to the data centre sector. It notes that electric lorry charging networks remain “barely-started” in most countries, illustrating the broader gap between political commitments and actual on-the-ground delivery of large-scale power and grid upgrades.
This mirrors the challenges faced by digital infrastructure developers trying to secure substations, high voltage connections and sufficient renewable supply.
Similarly, aviation and shipping remain far from net zero pathways. Europe’s planned mandates for sustainable aviation fuels face financing obstacles, and even if all proposed SAF projects were completed, they would meet only a fraction of long-term demand.
Hydrogen, long promoted as a cross-sector solution, receives a particularly blunt assessment.
Generation argues that the green hydrogen bubble has “truly burst”, with many European projects cancelled or shelved and with widespread acknowledgement that industrial decarbonisation may have been delayed by misplaced enthusiasm.
Investment trends diverge from politics
Despite political reversals in some markets, the report notes that clean energy investment is outpacing fossil fuel investment by roughly two to one.
Solar costs continue to decline year on year, while gas-fired generation costs have remained largely flat.
The authors write that companies should interpret the divergence between market fundamentals and policy uncertainty as a signal to reassess risk and diversify their strategies.
The report closes with an epigraph from William Shakespeare’s play Henry VIII, where the bard muses that actions rather than words realise virtues.
“And ’tis a kind of good deed to say well: And yet words are no deeds.”
This reminder captures how commitments must translate into implementation. As Generation frames it, actions will matter more than words in 2026.
