Data Centre Demand Putting Pressure on Energy Capabilities

Utilities in the US are predicting a tidal wave of demand for data centres thanks to the boom of AI, which, in turn, will dial up the need for electricity

Data centres — the physical location where computing machines and their related hardware equipment are stored — are, unsurprisingly, power-hungry machines. Mammoth efforts have been made in the data centre and energy spaces alike to provide necessary power to these facilities in the cleanest, greenest and most reliable way possible.

One of the main challenges that stands in the way of achieving this however is demand, which has grown exponentially in recent years thanks to the sudden popularity of generative AI.

Research from the International Energy Agency (IEA) shared that in 2022, data centres globally consumed around 460TWh of electricity, with that figure set to rise to well over 1,000TWh by 2026. The demand, the agency says, can be compared to the electricity consumption of the entirety of Japan.

Data centre demand driving energy customer growth

Off the back of Gen AI bursting into the public domain, power companies — particularly in the US — are anticipating electricity to go through the roof, estimating them to be several times higher than estimates just months earlier.

AI is predicted to require as much electricity as a medium-sized country, which poses challenges to data centre operators and energy providers alike thanks to issues to meet customer needs.

It recently emerged that nine of the top 10 US electric utilities said data centres were a main source of customer growth off the back of Reuters analysis.

Rystad Energy Analyst Geoff Hebertson said: “What we're seeing in the market is that these projects are not coming online fast enough to meet the local demand for the data centres.”

What impact is the rise of AI having on the electricity sector?

There’s no surprise that AI is putting a strain on the energy industry, particularly the electricity sector that directly powers it. Although it offers significant benefits and opportunities for the electricity sector, it places demands on infrastructure, resources and cybersecurity measures. 

Some of the pressures AI puts on the electricity sector include:

  • Computing power: Training and running AI algorithms requires significant computational resources, thus the need for electricity to power it grows
  • Data processing and storage: AI generates and consumes vast amounts of data, all of which needs to be processed, analysed and stored efficiently
  • Integration: Implementing AI often requires integrating it with existing infrastructure, which may require upgrades or modifications and as a result leads to increased demand
  • Energy consumption: While AI can help optimise energy usage in areas like smart grids and energy management systems, the energy consumption of AI itself is a considerable burden for the electricity sector
  • Cybersecurity: AI applications can also increase demand for cybersecurity measures to protect against potential threats and vulnerabilities.

With the above in mind, balancing these demands is essential for harnessing the full potential of AI while ensuring the reliability and security of electricity supply.

Repercussions of this have been felt globally, particularly in the US. NextEra Energy, the world's largest renewable energy company, stated that because of the amount of electricity needed for AI expanding rapidly it plans to build more than 3GW of clean power generation — enough to power a whole state’s homes — specifically to support data centres.

“There is an enormous amount of demand being driven across the US economy by the growth in data centres, driven by a lot of things of course, but specifically generative AI,” Rebecca Kujawa, Head of NextEra Energy Resources, said. “That growth is pretty explosive at this point.”

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