The International Energy Agency (IEA) has released a groundbreaking report that highlights the transformative potential of artificial intelligence in the energy sector.
The report projects a substantial increase in electricity demand, driven largely by data centers worldwide. It suggests that AI could significantly enhance cost-efficiency, competitiveness, and reduce emissions in the next decade. The special report, titled Energy and AI, provides a comprehensive, data-driven analysis of the evolving relationship between these two domains.
Electricity Demand from Data Centers to Soar
According to the report, the global electricity demand from data centers is expected to more than double by 2030, reaching approximately 945 terawatt-hours (TWh).
This figure slightly exceeds Japan's current total electricity consumption. AI is identified as the main catalyst for this rise, with electricity use in AI-optimized data centers projected to more than quadruple by the end of the decade.
Impact on Power Consumption in the US
In the United States, data centers are set to contribute almost half of the growth in electricity demand by 2030.
The energy consumption for processing data is on course to surpass the electricity used in manufacturing all energy-intensive products, including aluminum, steel, cement, and chemicals. Generally, advanced economies are anticipated to experience over 20% of electricity demand growth driven by data centers, reversing years of stagnant or declining power needs.
Diverse Energy Sources Tapped for Rising Demand
To meet the rising electricity needs of data centers, a variety of energy sources will be utilized
To meet the rising electricity needs of data centers, a variety of energy sources will be utilized, emphasizing renewables and natural gas due to their cost-effectiveness and availability. IEA Executive Director Fatih Birol stressed, “AI is one of the biggest stories in the energy world today – but until now, policymakers and markets lacked the tools to fully understand the wide-ranging impacts.” He highlighted that some countries would experience particularly strong effects.
Addressing Significant Uncertainties
The report also sheds light on the uncertainties influencing future electricity demand, ranging from macroeconomic conditions to AI adoption speed.
Questions persist regarding AI's capabilities, efficiency improvements, and potential energy sector bottlenecks. Additionally, while AI might heighten certain energy security challenges, it also serves as a vital tool to counter such threats, especially with the growing sophistication of cyberattacks on energy utilities.
AI's Role in Mitigating Emissions
Although increased electricity demand is expected to drive emissions higher, this effect may be moderate within the overall energy sector context. Widespread AI adoption could offset these emissions, and further, AI is anticipated to expedite advancements in energy technologies like solar PV and battery innovations.
Strategic Investments and Dialogue Urged
To harness AI's potential, countries are urged to invest in electricity generation, optimize data center operations, and foster greater collaboration between policymakers, the tech sector, and the energy industry. The IEA continues to expand its work on energy and AI through initiatives like their forthcoming Observatory on Energy, AI, and Data Centers, aimed at collecting comprehensive, cutting-edge data.
In conjunction with the report, the IEA has launched an AI agent on the report’s main webpage, designed to provide engaging and conversational insights into the report's findings.
Artificial intelligence has the potential to transform the energy sector in the coming decade, driving a surge in electricity demand from data centers around the world while also unlocking significant opportunities to cut costs, enhance competitiveness, and reduce emissions, according to a major new report from the IEA.
The IEA’s special report Energy and AI, offers the most comprehensive, data-driven global analysis to date on the growing connections between energy and AI.
Electricity demand from data centers
The report draws on new datasets and extensive consultation with policy makers, the tech sector
The report draws on new datasets and extensive consultation with policy makers, the tech sector, the energy industry, and international experts.
It projects that electricity demand from data centers worldwide is set to more than double by 2030 to around 945 terawatt-hours (TWh), slightly more than the entire electricity consumption of Japan currently.
AI will be the most significant driver of this increase, with electricity demand from AI-optimized data centers projected to more than quadruple by 2030.
Power consumption by data centers
In the United States, power consumption by data centers 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 aluminum, steel, cement and chemicals.
In advanced economies more broadly, data centers 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.
Diverse range of energy sources
A diverse range of energy sources will be tapped to meet data centers’ rising electricity needs
A diverse range of energy sources will be tapped to meet data centers’ rising electricity needs, according to the report – though renewables and natural gas are set to take the lead due to their cost-competitiveness and availability in key markets.
“AI is one of the biggest stories in the energy world today – but until now, policy makers and markets lacked the tools to fully understand the wide-ranging impacts,” said IEA Executive Director Fatih Birol.
“Global electricity demand from data centers is set to more than double over the next five years, consuming as much electricity by 2030 as the whole of Japan does today. The effects will be particularly strong in some countries.”
Significant uncertainties
“For example, in the United States, data centers are on course to account for almost half of the growth in electricity demand; in Japan, more than half; and in Malaysia, as much as one-fifth,” said Birol.
The report emphasizes 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.
Cyber attacks on energy utilities
AI could intensify some energy security strains while helping to address others, according to the report
AI could intensify some energy security strains while helping to address others, according to the report.
Cyber attacks 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 centers that power AI. The report provides first-of-its-kind estimates of demand from data centers for critical minerals, whose global supply is today highly concentrated.
Increase in electricity demand
While the increase in electricity demand for data centers 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 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.
Rise of AI
“With the rise of AI, the energy sector is at the forefront of one of the most important technological revolutions of our time,” Dr Birol said.
“AI is a tool, potentially an incredibly powerful one, but it is up to us – our societies, governments and companies – how we use it. The IEA will continue to provide the data, analysis and forums for dialogue to help policy makers and other stakeholders navigate the path ahead as the energy sector shapes the future of AI – and AI shapes the future of energy.”
Investments in electricity generation and grids
The report is part of the IEA’s expanding work analyzing the deepening ties between energy and AI
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 centers, and strengthen the dialogue between policymakers, the tech sector, and the energy industry.
The report is part of the IEA’s expanding work analyzing the deepening ties between energy and AI.
It builds on the Global Conference on Energy and AI the IEA hosted in December 2024 – the largest conference on this topic to date – and the Agency’s contributions to the AI Action Summit, chaired by France and India in February.
Observatory on Energy
The IEA will also soon launch a new Observatory on Energy, AI, and Data Centers, which will 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 publishing a new AI agent to help readers interact with its findings. The AI agent is available on the report’s main web page and answers questions on the report’s contents in an easy and conversational manner.
