Leading Global Energy Group Puts New Focus on AI and Energy

The International Energy Agency, a respected global analyst of energy trends for the past 50 years, has launched a new initiative on the rising energy consumption by data centers to power AI.

“The rise of artificial intelligence (AI) has put the electricity consumption of data centers in focus, making better stocktaking more important than ever,” the IEA said in its midyear update report on global electricity trends released Friday.

The report projects that global power needs for data centers could climb to consume between 1.5 percent and 3 percent of the world’s electricity generation by 2026.

The IEA said that the rapid growth in the data sector and the wide range of uncertainty about future energy use point to a need for greater analysis and more data transparency. The agency is launching an initiative it calls “Energy for AI, and AI for Energy,” and will host a global conference on the topic in Paris on December 5.

As Newsweek reported earlier this year, the rapid expansion of AI includes the construction of more data centers, the use of more energy-intensive processing chips and larger servers, all driving a tremendous increase in electricity consumption by data centers.

The latest sustainability reports from tech giants Google and Microsoft show that AI’s energy demands are knocking them off course for their ambitious climate targets. Instead of reducing greenhouse gas emissions in the past year, the companies both reported marked increases in emissions, largely due to the energy demands for AI.

Microsoft and Google parent company Alphabet both appear on Newsweek‘s 2023 rankings of America’s Most Responsible Companies and the Most Trustworthy Companies in America.

The IEA report said that in the U.S., estimates of data center energy use range from 1.3 percent to 4 percent of national electricity generation. Other parts of the world where the data sector is a proportionately larger part of the national economies have seen an astonishing share of power going to data centers.

In Ireland, for example, the IEA reported that 18 percent of electricity demand came from the data sector in 2022. In Singapore, data centers used up about 7 percent of the nation’s electricity.

Tech companies are scrambling to secure new energy sources and arrange transmission lines for new data centers as energy becomes a potential bottleneck to growth and the race for AI dominance.

As Newsweek reported in June, Amazon recently completed its first grid-scale solar farm with battery storage near San Bernardino, California, to help power its operations.

The IEA report said that Amazon Web Services also purchased an energy company’s data center which is connected to a nuclear power plant in Pennsylvania, and AWS plans to expand the data center’s capacity.

Amazon ranks second among retailers on Newsweek‘s 2024 list of the Most Trustworthy Companies in America and fifth in the retail sector on Newsweek‘s list of the World’s Most Trustworthy Companies 2023.

The remarkable growth in power use for data centers is just one of many factors driving a global surge in energy demand, according to the IEA. Global electricity demand is expected to grow by around 4 percent in 2024, and then grow by another 4 percent in 2025, the IEA projected.

“This would represent the highest annual growth rate since 2007,” the IEA said, with the exception of rebounds in energy demand following the global financial crisis in 2008 and the COVID-19 pandemic.

Demand is driven by strong economic growth, the electrification of more appliances and EVs, and the interaction of climate impacts and energy use.

As the world has experienced its hottest year on record, more intense and prolonged heat waves around the world are also driving up energy demands for cooling, the IEA said.

The growth in electricity demand comes alongside a boom in renewable energy sources, the IEA said. The share of global electricity from renewable sources is forecast to rise from 30 percent in 2023 to 35 percent in 2025.

The IEA said it expects renewable electricity to hit a historic milestone next year, as clean energy eclipses that from coal for the first time.