The IEA said, “This point of comparison provides a telling marker of the changing nature of modern, highly digitalized economies,” as quoted in the report.
AI Data Centers Driving Massive Energy Demand
The report highlights the growing energy demands of AI and conventional data centers. Electricity consumption from AI data centers alone is expected to grow fivefold by the end of the decade, doubling the total energy used by all data centers today, as per the TechCrunch report. Conventional data centers will also see increased consumption, though not as dramatically.
US Leads in AI Data Center Growth
The United States is expected to account for half of this surge in demand, with Europe and China making up most of the remainder, reported TechCrunch. Most new data centers are being built in cities with populations over 1 million, and half of the upcoming facilities will have capacities of at least 200 megawatts, often clustered near existing centers, as per the TechCrunch report.
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Rising Grid Congestion Challenges New Data Centers
IEA noted that, “This rapid build out of data centers — especially in clusters and around urban areas — comes with challenges,” adding, “Grid congestion and connection queues are increasing in many regions, and connection queues for new data centers are often already long,” as quoted in the report.
Supply Chain Bottlenecks Slow Data Center Growth
Supply chain bottlenecks are also slowing progress. Cables, critical minerals, gas turbines, and transformers are delaying upgrades needed to support the growing infrastructure, as per the TechCrunch report. Some companies, like Amperesand and Heron Power, are developing solid-state transformers, which could modernize the grid, integrate renewable energy more efficiently, and react faster to instabilities, as per the report. However, initial deployments are at least a year or two away, and scaling production will take time, as per TechCrunch.ALSO READ: JPMorgan warns AI boom needs $650 billion a year, just for 10% return – bubble brewing?
Renewable Energy to Power Most Data Centers by 2035
Renewable energy is expected to power most new data centers by 2035, the IEA said. Solar energy has become particularly attractive due to its falling costs, while natural gas and small modular nuclear plants will also play significant roles, as per the TechCrunch report. Over the next decade, roughly 400 terawatt-hours of electricity for data centers will come from renewables, 220 terawatt-hours from natural gas, and 190 terawatt-hours from nuclear, if small modular reactors deliver on their promise, as per the report.
FAQs
Why is spending on data centers higher than oil now?
Because AI and digital services are driving massive infrastructure growth, requiring more investment than traditional energy, as per the TechCrunch report.
How much energy will AI data centers use by 2030?
AI data centers’ electricity consumption is expected to grow fivefold by the end of the decade, as per the TechCrunch report.