Data centres |
AI and energy: an IEA perspective
A new report from the International Energy Agency, Energy and AI, is said to offer the most comprehensive, data-driven global analysis to date of the growing connections between energy and AI
The IEA analysis projects that electricity demand from data centres worldwide is set to more than double by 2030 to around 945 TWh/y, slightly more than the entire electricity consumption of Japan today. AI will be the most significant driver of this increase, with electricity demand from AI-optimised data centres projected to more than quadruple by 2030. In the United States, power consumption by data centres is on course to account for almost half of the growth in electricity demand between now and 2030. Driven by AI use, the US economy is set to consume more electricity in 2030 for processing data than for manufacturing all energy-intensive goods combined, including aluminium, steel, cement and chemicals. In advanced economies more broadly, data centres are projected to drive more than 20% of the growth in electricity demand between now and 2030, putting the power sector in those economies back on a growth footing after years of stagnating or declining demand in many of them. A diverse range of energy sources will be tapped to meet data centres’ rising electricity needs, according to the IEA report – though renewables and natural gas are set to take the lead due to their cost-competitiveness and availability in key markets.
The report emphasises the significant uncertainties that remain, from the macroeconomic outlook to how quickly AI will be adopted. It also notes questions over how capable and productive AI will become, how fast efficiency improvements will occur, and whether bottlenecks in the energy sector can be resolved.
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Graphics processing unit compute cost, 2006-2024. Source: IEA, Energy and AI. IEA analysis based on data from EpochAI (2024) and Coyle and Hampton (2024)
30 | May 2025|
www.modernpowersystems.com 2024 IEA. Licence: CC BY 4.0
AI could intensify some energy security strains while helping to address others, according to the report. Cyberattacks on energy utilities have tripled in the past four years and become more sophisticated because of AI. At the same time, AI is becoming a critical tool for energy companies to defend against such attacks. Another energy security concern relates to the expanding demand for critical minerals used in the equipment in the data centres that power AI. The report provides what are described as first-of-its-kind estimates of demand from data centres for critical minerals.
While the increase in electricity demand for data centres is set to drive up emissions, this increase will be small in the context of the overall energy sector and could potentially be offset by emissions reductions enabled by AI if adoption of the technology is widespread, according to the IEA report. Additionally, as AI becomes increasingly integral to scientific discovery, the report finds that it could accelerate innovation in energy technologies such as batteries and solar PV. According to the report, countries that want to benefit from the potential of AI need to quickly accelerate new investments in electricity generation and grids, improve the efficiency and flexibility of data centres, and strengthen the dialogue between policy makers, the tech sector and the energy industry.
The new report builds on the Global Conference on Energy and AI the IEA hosted in December 2024 and the Agency’s contributions to the AI Action Summit chaired by France and
India in February. The IEA is also planning to launch a new Observatory on Energy, AI and Data Centres, which aims to gather the most comprehensive and recent data worldwide on AI’s electricity needs, in addition to tracking cutting-edge AI applications across the energy sector.
Alongside the report, the IEA is making available a new AI agent to help readers interact with its findings. The AI agent is available on the report’s main web page and is said to answer questions on the report’s contents in an “easy and conversational manner.”
Some key takeaways from the new report:
There has been a step change in the capabilities of AI, driven by falling computation costs, a surge in data availability and technical breakthroughs. However, there is no AI without energy. Affordable, reliable and sustainable electricity supply will be a crucial determinant of AI development, and countries that can deliver the energy needed at speed and scale will be best placed to benefit. Training and deploying AI models takes place in large and power-hungry data centres. A typical AI-focused data centre consumes as much electricity as 100 000 households, but the largest ones under construction today will consume 20 times as much.
Data centres account for a small share of global electricity consumption today, but their local impacts are far more pronounced. Global investment in data centres has nearly doubled since 2022 and amounted to half a trillion dollars in 2024. This investment boom has led to growing concerns about skyrocketing electricity demand. Data centres accounted for around 1.5% of the world’s electricity consumption in 2024, or 415 TWh. The United States accounted for the largest share of global data centre electricity consumption in 2024 (45%), followed by China (25%) and Europe (15%). Globally, data centre electricity consumption has grown by around 12% per year since 2017, more than four times faster than the rate of total electricity consumption. AI-focused data centres can draw as much electricity as power-intensive factories such as aluminium smelters, but they are much more geographically concentrated. Nearly half of data centre capacity in the United States is in five regional clusters. The sector accounts for substantial shares of electricity consumption in local markets.
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