AI Boom Drives Electricity Demand, Posing Climate Challenges

Global electricity demand is projected to increase by 40% in the next decade, fueled by population growth, economic expansion, and the rise of AI, according to the International Energy Agency's latest World Energy Outlook. While China will continue to be a major driver, emerging economies and advanced economies like the US and Europe, spurred by data centers, will also contribute significantly to the increased demand. Air conditioning is another major factor, with income-driven AC growth adding 330 gigawatts to global peak demand by 2035, and rising temperatures adding another 170 GW. Investment in data centers is expected to surpass $580 billion in 2025, exceeding global oil supply investments. While data centers currently account for less than 10% of the projected increase in total electricity demand between now and 2035, their impact is geographically concentrated. In the US, data centers are expected to account for half the growth in total electricity demand between now and 2030. This concentrated demand presents unique challenges for local grids. The report emphasizes the importance of transitioning to cleaner energy sources to meet this rising demand. Solar and wind surpassed coal as the leading source of electricity in the first half of this year, and coal use could peak by the end of the decade. Nuclear energy and solar are expected to play significant roles in replacing fossil fuels. Despite progress in renewable energy, global emissions are on track to hit a record high this year. A faster transformation of the energy system, including electricity generation and distribution, is crucial to limit warming and prevent the worst effects of climate change.