Introduction to AI and Energy
The International Energy Agency (IEA) has explored the opportunities and challenges brought about by AI with regards to global energy. Training and deploying sophisticated AI models occur within vast, power-hungry data centres. A “typical AI-focused data centre consumes as much electricity as 100 000 households,” the IEA notes, with the largest facilities under construction projected to demand 20x times that amount.
Surging Data Centre Investments
Global investment in data centres has nearly doubled since 2022, reaching half a trillion dollars in 2024, sparking concerns about escalating electricity needs. While data centres accounted for approximately 1.5% of global electricity consumption in 2024 (around 415 terawatt-hours, TWh,) their local impact is far more significant. Consumption has grown annually by about 12% since 2017, vastly outpacing overall electricity demand growth. The US leads this consumption (45%), followed by China (25%) and Europe (15%). Almost half of US data centre capacity is concentrated in just five regional clusters.
Projected Energy Consumption
Looking ahead, the IEA projects global data centre electricity consumption to more than double by 2030 to reach approximately 945 TWh. To put that in context, that’s slightly more than Japan’s current total electricity consumption. AI is pinpointed as the “most important driver of this growth”. The US is projected to see the largest increase, where data centres could account for nearly half of all electricity demand growth by 2030. By the decade’s end, US data centres are forecast to consume more electricity than the combined usage of its aluminium, steel, cement, chemical, and other energy-intensive manufacturing industries.
Meeting Global AI Energy Demand
Powering this AI boom requires a diverse energy portfolio. The IEA suggests renewables and natural gas will take the lead, but emerging technologies like small modular nuclear reactors (SMRs) and advanced geothermal also have a role. Renewables, supported by storage and grid infrastructure, are projected to meet half the growth in data centre demand globally up to 2035. Natural gas is also crucial, particularly in the US, expanding by 175 TWh to meet data centre needs by 2035 in the Base Case. Nuclear power contributes similarly, especially in China, Japan, and the US, with the first SMRs expected around 2030.
The Potential of AI to Optimise Energy Systems
Beyond its energy demands, AI offers significant potential to revolutionise the energy sector itself. The IEA details numerous applications, including energy supply, electricity sector, end uses, and innovation. AI can improve forecasting for variable renewables, reduce curtailment, enhance grid balancing, and unlock significant transmission capacity through smarter management. Widespread AI adoption for process optimisation could yield energy savings equivalent to Mexico’s total energy consumption today.
Collaboration is Key
Despite the potential, significant barriers hinder AI’s full integration into the energy sector. These include data access and quality issues, inadequate digital infrastructure and skills, regulatory hurdles, and security concerns. Cybersecurity is a double-edged sword: while AI enhances defence capabilities, it also equips attackers with sophisticated tools. The IEA concludes that deeper dialogue and collaboration between the technology sector, the energy industry, and policymakers are paramount.
Conclusion
The IEA will continue to provide the data, analysis, and forums for dialogue to help policymakers and other stakeholders navigate the path ahead as the energy sector shapes the future of AI, and AI shapes the future of energy. While AI presents opportunities for substantial emissions reductions through optimisation, exceeding the emissions generated by data centres, these gains are not guaranteed and could be offset by rebound effects.
FAQs
Q: What is the current energy consumption of data centres?
A: Data centres accounted for approximately 1.5% of global electricity consumption in 2024, around 415 terawatt-hours (TWh).
Q: What is the projected energy consumption of data centres by 2030?
A: The IEA projects global data centre electricity consumption to more than double by 2030 to reach approximately 945 TWh.
Q: What are the main drivers of energy consumption in data centres?
A: AI is pinpointed as the “most important driver of this growth”, with the US projected to see the largest increase.
Q: How can AI optimise energy systems?
A: AI can improve forecasting for variable renewables, reduce curtailment, enhance grid balancing, and unlock significant transmission capacity through smarter management.
Q: What are the main barriers to AI’s integration into the energy sector?
A: Significant barriers include data access and quality issues, inadequate digital infrastructure and skills, regulatory hurdles, and security concerns.
