The voracious appetite for power of data centres and AI applications is about to bring global energy systems crashing down or will require an long extension of the fossil fuels according to some of the more hyperbolic comment on the topic over recent months.
The International Energy Agency (IEA), in its mid-year update on the state of the global electricity sector, calls for a more nuanced evidenced-based approach to this looming challenge, which it detailed in its Electricity 2024 report published in January
The report highlights how a range of as-yet highly uncertain factors will determine how AI-related electricity consumption will develop, such as the pace of deployment, expansion of the diverse uses of AI, and the potential for energy efficiency improvements. We just do not have enough data on these themes to make accurate forecasts, the IEA argues, highlighting the need for more reliable data and better stocktaking measures to get a clearer picture.
“Better collection of electricity consumption data of the data centre sector will be essential to identify past developments correctly and to better understand future trends,” says the IEA.
The report also puts electricity demand from these rising technologies into context within the global electricity system. Electricity consumption of data centres, excluding cryptocurrencies, is estimated to have accounted for around 1-1.3% of global electricity demand in 2022 and could rise to 1.5-3% by 2026, according to the agency.
That is slightly higher than electric vehicles, which despite rapid growth in the sector, consumed only 0.5% of the world's electricity in 2022, with that share potentially rising to 1.5-2% by 2026. However, it is lower than primary aluminium production, which currently accounts for some 4% of global electricity demand.
This doesn’t mean there’s nothing to worry about. In some countries, data centres already play a major role in the economy and consume electricity to match. In Ireland, 18% of electricity demand came from the data centre sector in 2022, while in Singapore, data centres accounted for around 7% of overall electricity use in 2020.
The IEA notes that various US states are beefing up their electricity infrastructure to cope with an expected rise in demand from data centres, while the US government launched the Federal-State Modern Grid Deployment Initiative in May 2024, having recognised the need to upgrade power networks in the face of growth from data centres, among other expanding sources of demand. European countries, India and China are among those also bolstering the capacity of their grids.
Uncertainty over the extent of future power demand from data centres, and how much of that demand can be met by renewable energy, means talk of it extending fossil fuel demand also remains speculative. The IEA currently expects global demand for both oil and gas to peak by 2030, even if the hydrocarbons producers of Opec say they see demand holding up for a lot longer.
The IEA has launched an initiative, known as “Energy for AI & AI for Energy”, in an effort to bring more clarity to the situation by improving understanding of how AI and data centres are likely to impact electricity demand. As part of this push, the agency is hosting a Global Conference on Energy and AI to be held in Paris on 5 December, 2024, bringing together governments, industry, researchers and other stakeholders.
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