AI'S ENERGY HUNGER REDRAWS MAP OF GLOBAL POWER DEMAND

From data centre proliferation to battery breakthroughs and grid security, AI is simultaneously straining electricity systems and offering the most powerful toolkit yet for transforming how the world produces and consumes energy

- ABDULAZIZ KHATTAK

THE electricity consumed by the world's data centres reached roughly 1.5 per cent of global electricity demand, to approximately 415 terawatt-hours (TWh) in 2024, and the International Energy Agency (IEA) projects that figure will more than double to around 945 TWh by 2030, before potentially climbing as high as 1,200 TWh by 2035 in the base case.

These numbers represent nothing less than the most significant structural shift in energy demand since the industrialisation of developing economies.

A single hyperscale, Al-focused data centre today consumes as much electricity annually as 100,000 households. The largest facility currently under construction could match the consumption of 2 million households.

The full scope of these dynamics, and of artificial intelligence's (AI) simultaneously disruptive and potentially transformative role across the energy system, is set out in the IEA's landmark 'Energy and Al' report.

The report's framing is deliberately dual. AI is both a voracious and growing consumer of electricity and a sophisticated instrument for managing, decarbonising and securing the energy systems on which all modern economies depend.

ANATOMY OF ENERGY-HUNGRY TECHNOLOGY

Al's rise from an academic discipline to an industry with trillions of dollars at stake has been underpinned by three compounding forces: A dramatic decline in the cost of graphics processing units; an exponential growth in the scale of training datasets; and successive algorithmic breakthroughs.

Of the $16 trillion increase in the market capitalisation of S&P 500 companies since 2022, $12 trillion has come from Al-related firms.

These computational gains are not free as training the largest AI models requires infrastructure of formidable scale.