Artificial Intelligence is poised to significantly increase global data center electricity consumption, presenting both challenges and opportunities for energy infrastructure.

A major new IEA report presents groundbreaking data and analysis on one of the most pressing and least understood energy issues today, examining the wide range of potential impacts of artificial intelligence (AI).

Artificial intelligence has the potential to transform the energy sector over the coming decade, driving a surge in electricity demand from data centers worldwide while also unlocking significant opportunities to reduce costs, enhance competitiveness, and lower emissions, according to a major new report from the IEA.

The IEA’s special report, “Energy and AI,” released today, offers the most comprehensive, data-driven global analysis to date on the growing connections between energy and AI. The report draws on new datasets and extensive consultation with policymakers, the tech sector, the energy industry, and international experts. It projects that electricity demand from data centers worldwide is set to more than double by 2030 to around 945 terawatt-hours (TWh), slightly more than Japan’s current electricity consumption. AI will be the most significant driver of this increase, with electricity demand from AI-optimised data centres projected to more than quadruple by 2030.

In the United States, power consumption by data centres is on course to account for almost half of the growth in electricity demand between now and 2030. Driven by AI use, the US economy is set to consume more electricity in 2030 for processing data than for manufacturing all energy-intensive goods combined, including aluminium, steel, cement, and chemicals. In advanced economies more broadly, data centres are projected to drive more than 20% of the growth in electricity demand between now and 2030, putting the power sector in those economies back on a growth footing after years of stagnating or declining demand in many of them.

A diverse range of energy sources will be tapped to meet data centres’ rising electricity needs, according to the report. However, renewables and natural gas are set to take the lead due to their cost competitiveness and availability in key markets.

“AI is one of the biggest stories in the energy world today – but until now, policymakers and markets lacked the tools to understand the wide-ranging impacts fully,” said IEA Executive Director Fatih Birol. “Global electricity demand from data centres is set to more than double over the next five years, consuming as much electricity by 2030 as the whole of Japan does today. The effects will be powerful in some countries. For example, in the United States, data centres are on course to account for almost half of the growth in electricity demand; in Japan, more than half; and in Malaysia, as much as one-fifth.”

The report emphasizes the significant uncertainties that remain, from the macroeconomic outlook to the rate of AI adoption. It also raises questions about the capabilities and productivity of AI, the pace of efficiency improvements, and whether bottlenecks in the energy sector can be overcome.

AI could intensify some energy security strains while helping to address others, according to the report. Cyberattacks on energy utilities have tripled in the past four years and have become more sophisticated due to the use of AI. At the same time, AI is becoming a critical tool for energy companies to defend against such attacks. Another energy security concern relates to the growing demand for critical minerals used in the equipment of data centres that power AI. The report provides first-of-its-kind estimates of demand from data centres for vital minerals, whose global supply is today highly concentrated.

While the increase in electricity demand for data centers is expected to drive up emissions, this increase will be slight in the context of the overall energy sector. It could be offset by emissions reductions enabled by AI if the technology is widely adopted, according to the report. Additionally, as AI becomes increasingly integral to scientific discovery, the report finds that it could accelerate innovation in energy technologies such as batteries and solar PV. 

“With the rise of AI, the energy sector is at the forefront of one of the most important technological revolutions of our time,” Dr Birol said. “AI is a tool, potentially an incredibly powerful one, but it is up to us – our societies, governments, and companies – how we use it. The IEA will continue to provide the data, analysis, and forums for dialogue to help policy makers and other stakeholders navigate the path ahead as the energy sector shapes the future of AI – and AI shapes the future of energy.”

According to the report, countries seeking to capitalize on the potential of AI must rapidly accelerate investments in electricity generation and grids, enhance the efficiency and flexibility of data centers, and foster dialogue among policymakers, the tech sector, and the energy industry.

The report is part of the IEA’s expanding work analysing the deepening ties between energy and AI. It builds on the Global Conference on Energy and AI, hosted by the IEA in December 2024 – the largest conference on this topic to date – and the Agency’s contributions to the AI Action Summit, chaired by France and India in February. The IEA will also soon launch a new Observatory on Energy, AI and Data Centres, which will gather the most comprehensive and recent data worldwide on AI’s electricity needs, in addition to tracking cutting-edge AI applications across the energy sector.

Alongside the report, the IEA is publishing a new AI agent to help readers interact with its findings. The AI agent is available on the report’s main webpage and answers questions about the report’s contents in an easy-to-understand and conversational manner.

Download the “Energy and AI” report here » GO.