IEA warns of surging energy needs as AI transforms global power landscape

The International Energy Agency (IEA) has forecast that artificial intelligence (AI) has the potential to transform the energy sector in the coming decade by driving a surge in electricity demand from data centres around the world.

In a major new report released today, the IEA said the technology also has the potential to unlock significant opportunities to cut costs, enhance competitiveness, spur innovation and reduce emissions.

The IEA’s data-driven global analysis – which includes new datasets and extensive consultation with policymakers, the tech sector, the energy industry and international experts – has identified growing connections between energy and AI, a topic that has soared to the top of the policy and business agenda.

Demand to double

A key finding of the IEA study is that electricity demand from data centres worldwide is set to more than double by 2030 to around 945 terawatt-hours—slightly more than the entire electricity consumption of Japan today.

It also found that AI is on course to be the most significant driver of this increase, with electricity demand from AI-optimised data centres projected to more than quadruple by 2030.

Globally, data centres currently account for less than 10% of projected electricity demand growth to 2030.

But new forecasts suggest that in the US alone, data centres are on track to account for almost half of the growth in electricity demand.

Range of energy needed

The IEA believes a diverse range of energy sources will need to be developed to meet data centres’ rising electricity needs, with renewables and natural gas set to take the lead due to their cost-competitiveness and availability in key markets.

AI could intensify some energy security strains while helping to address others.

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.

Small emissions increase

Another consideration relates to the expanding demand for critical minerals used in the equipment in the data centres that power AI.

IEA executive director Fatih Birol said that, 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.

“As AI becomes increasingly integral to scientific discovery, it could accelerate innovation in energy technologies such as batteries and solar PV (photovoltaic).”

Improved capabilities

Mr Birol noted that there has been a step-change in the capabilities of AI, driven by falling computation costs, a surge in data availability and technical breakthroughs.

“AI is the science of making machines capable of learning to perform tasks that traditionally required human intelligence [and] is emerging as a general-purpose technology, much like electricity,” the IEA report noted.

“Today, it can generate text and videos, accelerate scientific discovery in fields like medicine or materials science, make manufacturing robots smarter and more productive, drive commercial taxis in complex city landscapes and detect threats to critical infrastructure.”