A warning has been sounded about the growing power requirements for data centres, especially in an increasingly AI focused world.

The International Energy Agency (IEA) has announced that a new report entitled ‘Energy and AI’, has concluded that “artificial intelligence has the potential to transform the energy sector in the coming decade, driving a surge in electricity demand from data centres around the world while also unlocking significant opportunities to cut costs, enhance competitiveness and reduce emissions.”

It comes after it was revealed earlier this week that US energy utilities are receiving massive requests for power from data centre companies, in some cases exceeding their peak demand or their existing generation capacity.

Power requirements

The power requests come as large tech companies seek to build out data centre capacity for power-hungry AI systems, create a complicated picture for utilities as they try to project real demand and how to meet it.

In December 2024 Meta Platforms for example had announced it was exploring the use of nuclear energy for its fleet of data centres in the United States.

Google and others have done likewise.

There have been some interesting developments in nuclear technology in recent years, most notably around small modular reactors.

Last week the Canadian Nuclear Safety Commission (CNSC) approved a request from Ontario-based Ontario Power Generation (OPG) to build a single small modular reactor (SMR), which will be the first such license issued in Canada.

OPG will apparently construct a single GE Hitachi BWRX-300 SMR, which could generate up to 300 megawatts of electricity.

AI data centres

Into this comes the IEA report that AI is set to drive surging electricity demand from data centres while offering the potential to transform how the energy sector works.

The IEA report projects that electricity demand from data centres worldwide is set to more than double by 2030 to around 945 terawatt-hours (TWh), slightly more than the entire electricity consumption of Japan today.

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, said the IEA report.

It noted that 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.

It said that 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, the IEA report found that data centres are projected to “drive more than 20 percent 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.”

However the IEA report also noted that a diverse range of energy sources will be tapped to meet data centres’ rising electricity needs – though 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, policy makers and markets lacked the tools to fully understand the wide-ranging impacts,” 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,” said Birol. “The effects will be particularly strong 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 emphasises the significant uncertainties that remain, from the macroeconomic outlook to how quickly AI will be adopted. It also notes that questions over how capable and productive AI will become, how fast efficiency improvements will occur, and whether bottlenecks in the energy sector can be resolved.