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Released April 11, 2025 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Around the world, data centers continue to be built and proposed at an extremely rapid rate, raising questions about whether there will be sufficient electric generation available to power those centers, particularly those equipped with artificial intelligence (AI). Given the highly dynamic nature of the technologies used in data centers, notably AI, most research firms worth their salt have issued projections about the growth of data centers and the electric generation needed to power them.
In a report released April 10, "Energy and AI," the International Energy Agency (IEA) (Paris, France) entered the fray. It proposed four scenarios under which the electricity demand for data centers could unfold over the next 5-10 years.
Global electricity use by data centers will be about 500 terawatt-hours (TWh) in 2025, and that could increase modestly or dramatically over the next decade under various scenarios proposed by the energy agency.
The four scenarios are:
Click on the image to see IEA's four scenarios for electric use by data centers around the world to 2030 and 2035.
"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," IEA Executive Director Fatih Birol said in a statement accompanying the report. "Global electricity demand from data centers is set to more than double over the next five years, consuming almost as much electricity by 2030 as the whole of Japan does today. The effects will be particularly strong in some countries. For example, in the United States, data centers are on course to account for almost half of the (overall national) growth in electricity demand."
Looking at the geographical distribution of data centers, the U.S. currently has the number one position, followed by China, Europe and Asia excluding China. Going out to 2030, while all regions are expected to experience growth, it is expected to be most pronounced in the U.S. and China.
In the U.S., as in some other countries, the rapidly growing number of planned data centers has created heartburn for utilities and grid managers serving the geographic clusters of data centers, as data center developers typically want to secure power faster than utilities can provide it. For more on that issue, see March 17, 2025, article - On a Diet: As Data Centers Strain the Grid, Can They Curb Their Power Appetite?; April 25, 2024, article - Data Centers, Oil & Gas Industry to Drive Surge in Texas Electricity Demand; and April 16, 2024, article - Data Center Construction Propels Electric Load Growth and Utility Capex.
Industrial Info is tracking plans to begin construction of approximately 1,528 data centers in the U.S. through December 2029, valued at about $678.7 billion. Of this sum, 93 projects are deemed to have a high probability of starting construction according to schedule, while 1,241 projects have a medium probability. About 194 projects have a low probability of beginning construction according to their current schedule.
According to Industrial Info's Global Market Intelligence (GMI) platform, the states with the greatest dollar value of proposed data center projects kicking off construction between January 2025 and December 2029 are Virginia, Texas, Georgia, Ohio and Arizona.
The IEA report projected that a diverse range of energy sources will be tapped to meet data centers' rising electricity needs, though renewables and natural gas are set to take the lead due to their cost-competitiveness and availability in key markets.
Cyberattacks on energy utilities have tripled in the past four years and become more sophisticated because of AI, the report said. At the same time, it added, AI is becoming a critical tool for energy companies to defend against such attacks.
While data centers' voracious demand for electricity has been a top-of-mind issue for the Electric Power industry, the "Energy and AI" report highlighted other implications of AI, including "unlocking significant opportunities to cut costs, enhance competitiveness and reduce emissions" for various industries.
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.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
In a report released April 10, "Energy and AI," the International Energy Agency (IEA) (Paris, France) entered the fray. It proposed four scenarios under which the electricity demand for data centers could unfold over the next 5-10 years.
Global electricity use by data centers will be about 500 terawatt-hours (TWh) in 2025, and that could increase modestly or dramatically over the next decade under various scenarios proposed by the energy agency.
The four scenarios are:
- The Base Case explores the trajectory of electricity consumption in data centers under current regulatory conditions and industry projections. The key driver in this case in the near term is industry projections for server shipments to 2028 and a continuation of this trend after 2028. Efficiency improvements are expected to continue playing a pivotal role in limiting strong growth in energy consumption, despite increasing demand for digital services. In this scenario, the IEA projected that global electricity use by data centers will roughly double, to 1,000 TWh by 2030 and rise further to about 1,250 TWh by 2035.
- The Lift-Off Case assumes even stronger growth in AI adoption than in the Base Case. A more resilient supply chain and greater flexibility in data center location, powering and operations enable faster data center deployment. The IEA sees electric use in this case rising to about 1,300 TWh in 2030 and reaching about 1,750 TWh in 2035.
- The High Efficiency Case shares similar constraints and drivers with the Base Case but assumes stronger progress on energy efficiency in software, hardware and infrastructure. As a result, the same level of demand for digital services and AI is met with a reduced electricity consumption footprint. Electricity use in this case would grow at a slower rate than under the Base Case, reaching about 750 TWh in 2030 and 1,000 TWh in 2035.
- The Headwinds Case captures the impact of a downside in the outlook for data center deployment, particularly due to slower-than-expected AI adoption. The emergence of local bottlenecks, along with a tight supply chain, causes delays in capacity expansion compared to the most ambitious industry projections. In this case, electricity use by data centers around the world still rises, albeit at the slowest pace of the four cases. Electricity use in this scenario rises to approximately 700 TWh in 2030 and remains at that level to 2035.
"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," IEA Executive Director Fatih Birol said in a statement accompanying the report. "Global electricity demand from data centers is set to more than double over the next five years, consuming almost as much electricity by 2030 as the whole of Japan does today. The effects will be particularly strong in some countries. For example, in the United States, data centers are on course to account for almost half of the (overall national) growth in electricity demand."
Looking at the geographical distribution of data centers, the U.S. currently has the number one position, followed by China, Europe and Asia excluding China. Going out to 2030, while all regions are expected to experience growth, it is expected to be most pronounced in the U.S. and China.
In the U.S., as in some other countries, the rapidly growing number of planned data centers has created heartburn for utilities and grid managers serving the geographic clusters of data centers, as data center developers typically want to secure power faster than utilities can provide it. For more on that issue, see March 17, 2025, article - On a Diet: As Data Centers Strain the Grid, Can They Curb Their Power Appetite?; April 25, 2024, article - Data Centers, Oil & Gas Industry to Drive Surge in Texas Electricity Demand; and April 16, 2024, article - Data Center Construction Propels Electric Load Growth and Utility Capex.
Industrial Info is tracking plans to begin construction of approximately 1,528 data centers in the U.S. through December 2029, valued at about $678.7 billion. Of this sum, 93 projects are deemed to have a high probability of starting construction according to schedule, while 1,241 projects have a medium probability. About 194 projects have a low probability of beginning construction according to their current schedule.
According to Industrial Info's Global Market Intelligence (GMI) platform, the states with the greatest dollar value of proposed data center projects kicking off construction between January 2025 and December 2029 are Virginia, Texas, Georgia, Ohio and Arizona.
The IEA report projected that a diverse range of energy sources will be tapped to meet data centers' rising electricity needs, though renewables and natural gas are set to take the lead due to their cost-competitiveness and availability in key markets.
Cyberattacks on energy utilities have tripled in the past four years and become more sophisticated because of AI, the report said. At the same time, it added, AI is becoming a critical tool for energy companies to defend against such attacks.
While data centers' voracious demand for electricity has been a top-of-mind issue for the Electric Power industry, the "Energy and AI" report highlighted other implications of AI, including "unlocking significant opportunities to cut costs, enhance competitiveness and reduce emissions" for various industries.
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.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
