The IEA Electricity 2024: Global trends
Analysis and forecast to 2026 report states
Global electricity demand from data centres
could double towards 2026
We estimate that data centres, cryptocurrencies, and artificial intelligence (AI)
consumed about 460 TWh of electricity worldwide in 2022, almost 2% of total
global electricity demand. Data centres are a critical part of the infrastructure that
supports digitalisation along with the electricity infrastructure that powers them.
The ever-growing quantity of digital data requires an expansion and evolution of
data centres to process and store it. Electricity demand in data centres is mainly
from two processes, with computing accounting for 40% of electricity demand of
a data centre. Cooling requirements to achieve stable processing efficiency
similarly makes up about another 40%. The remaining 20% comes from other
associated IT equipment.
Future trends of the data centre sector are complex to navigate, as technological
advancements and digital services evolve rapidly. Depending on the pace of
deployment, range of efficiency improvements as well as artificial intelligence and
cryptocurrency trends, we expect global electricity consumption of data centres,
cryptocurrencies and artificial intelligence to range between 620-1 050 TWh in
2026, with our base case for demand at just over 800 TWh – up from 460 TWh in
2022. This corresponds to an additional 160 TWh up to 590 TWh of electricity
demand in 2026 compared to 2022, roughly equivalent to adding at least one
Sweden or at most one Germany. …
Data centres are significant drivers of electricity demand
growth in many regions
There are currently more than 8 000 data centres globally, with about 33% of these
located in the United States, 16% in Europe and close to 10% in China. US data
centre electricity consumption is expected to grow at a rapid pace in the coming
years, increasing from around 200 TWh in 2022 (~4% of US electricity demand),
to almost 260 TWh in 2026 to account for 6% of total electricity demand. Growth
will be driven by increased adoption of 5G networks and cloud-based services, as
well as competitive state tax incentives.
China’s State Grid Energy Research Institute expects electricity demand in the
country’s data centre sector to double to 400 TWh by 2030, compared to 2020.
We forecast electricity consumption from data centres in China to reach around
300 TWh by 2026. Regulations are being updated to promote sustainable
practices in current and future data centres to align them with decarbonisation
strategies. A major source of data centre growth is expected to come from the
rapid expansion of 5G networks and the Internet of Things (IoT).
In the European Union, data centre electricity consumption is estimated at slightly
below 100 TWh in 2022, almost 4% of total EU electricity demand. Around 1 240
data centres were operating within Europe in 2022, with the majority concentrated
in the financial centres of Frankfurt, London, Amsterdam, Paris, and Dublin. With
a significant number of additional data centres planned, as well as new
deployments that can be expected to be realised over the coming years, we
forecast that electricity consumption in the data centre sector in the European
Union will reach almost 150 TWh by 2026.
Almost one-third of electricity demand in Ireland could
come from data centres by 2026
In Europe, the data centre market in Ireland is developing rapidly as their electricity
consumption grows along with new policies and initiatives. Electricity demand from
data centres in Ireland was 5.3 TWh in 2022, representing 17% of the country’s
total electricity consumed. That is equivalent to the amount of electricity consumed
by urban residential buildings. At this pace, in a high case scenario, Ireland’s data
centres might double their electricity consumption by 2026, and with AI
applications penetrating the market at a fast rate, the sector could reach a share
of 32% of the country’s total electricity demand in 2026 if most of the approved
projects are able to be connected to the system. This assumes that at the same
time efficiency gains in other sectors continue to take place.
Ireland’s stock of data centres, currently at 82, is expected to grow by 65% in the
coming years, with 14 data centres under construction and 40 approved to start the building phase. Ireland has one of the lowest corporate tax rates in the European Union (12.5%), which is an advantage for the sector’s expansion in the
country. By contrast, European OECD countries’ average corporate tax rate is
21.5%.
The rapid expansion of the data centre sector and the elevated electricity demand
can pose challenges for the electricity system. To safeguard the system’s stability
and reliability, Ireland’s Commission for Regulation of Utilities published in late
2021 its decision on the new requirements applicable to new and ongoing data
centre grid connection applications with three assessment criteria to determine if
the connection offer can be made. First, the location of the data centre with respect
to whether they are within a constrained region of the electricity system. Second,
the ability of the data centre to bring onsite dispatchable generation and/or storage
equivalent, at least, to their demand. Third, the ability of the data centre to provide
flexibility in their demand by reducing it when requested by a system operator. For
the third clause, data centre operators that offer their servers for hire will have to
update their contracts to reflect the new regulations. These requirements
showcase the local government’s inclination to grant connections to those
operators that can make efficient use of the grid and incorporate renewable energy
sources with a view of decarbonisation targets. …
Denmark currently hosts 34 data centres, half of them located in Copenhagen. As
in Ireland, Denmark’s total electricity demand is forecast to grow mainly due to the
data centre sector’s expansion, which is expected to consume 6 TWh by 2026,
reaching just under 20% of the country’s electricity demand. Denmark is the hub
for a new pan-European initiative, Net Zero Innovation Hub for Data Centers. The
hub offers a space for collaboration between suppliers, operators and
governments to enable progress towards the sector’s innovation and
decarbonisation while meeting increasing regulatory demands.
Data centres in Nordic countries – such as Sweden, Norway, and Finland –
benefit from lower electricity costs. This is attributed to lower cooling demand due
to their colder weather, and to lower electricity prices in comparison to other major
data centre hubs, such as Germany, France and the Netherlands. The largest
actor amongst Nordic countries is Sweden, with 60 data centres, and half of them
in Stockholm. In August 2023, plans for a nuclear-powered data centre were
announced utilising small modular reactors (SMR) technology on the east coast
of Sweden, with a commissioning date envisaged for 2030. Given decarbonisation
targets, Sweden and Norway may further increase their participation in the data
centre market since almost all of their electricity is generated from low-carbon
sources.
In the United States, the largest data centre hubs are located in California, Texas
and Virginia. In the case of Virginia, their economy was dominated in 2021 by the
data centre sector expansion, attracting 62% of all of the state’s new investments
and providing more than 5 000 new jobs. Northern Virginia is the largest data
centre market in the country, collecting USD 1 billion in local tax revenues per
year, with growth trending higher as companies, such as Amazon’s planned
USD 35 billion expansion by 2040, continue to increase their investment in the
state. New legislation is aimed at tightening regulations on data centre
developments, including zoning rules, mandatory environment and resource
impact assessments, as well as guidelines on water usage. In US northeastern
states, the regional transmission organisation PJM expects data centres to
increasingly drive electricity demand, forecasting a rise in summer peak load from
151 GW in 2024 to 178 GW by 2034.
Artificial intelligence and cryptocurrencies are additional
sources of electricity demand growth
Market trends, including the fast incorporation of AI into software programming
across a variety of sectors, increase the overall electricity demand of data centres.
Search tools like Google could see a tenfold increase of their electricity demand
in the case of fully implementing AI in it. When comparing the average electricity
demand of a typical Google search (0.3 Wh of electricity) to OpenAI’s ChatGPT (2.9 Wh per request), and considering 9 billion searches daily, this would require almost 10 TWh of additional electricity in a year.
AI electricity demand can be forecast more comprehensively based on the amount
of AI servers that are estimated to be sold in the future and their rated power. The
AI server market is currently dominated by tech firm NVIDIA, with an estimated
95% market share. In 2023, NVIDIA shipped 100 000 units that consume an
average of 7.3 TWh of electricity annually. By 2026, the AI industry is expected to
have grown exponentially to consume at least ten times its demand in 2023.
…
In 2022, cryptocurrencies consumed about 110 TWh of electricity, accounting for
0.4% of the global annual electricity demand, as much as the Netherland’s total
electricity consumption. In our base case, we anticipate that the electricity
consumption of cryptocurrencies will increase by more than 40%, to around
160 TWh by 2026. Nevertheless, uncertainties remain for the pace of acceleration
in cryptocurrency adoption and technology efficiency improvements. Ethereum,
the second largest cryptocurrency by market cap, reduced its electricity demand
by an amazing 99% in 2022 by changing its mining mechanism. By contrast,
Bitcoin is estimated to have consumed 120 TWh by 2023, contributing to a total
cryptocurrency electricity demand of 130 TWh. Challenges in reducing electricity
consumption remain, as energy savings can be offset by increases in other energy
consuming operations, such as other cryptocurrencies, even as some become
more efficient.
Efficiency improvements and regulations will be crucial
in restraining data centre energy consumption
The revised Energy Efficiency Directive from the European Commission includes
regulations applicable to the European data centre sector, promoting more
transparency and accountability to enhance electricity demand management.
Starting from 2024, operators have mandatory reporting obligations for the energy
use and emissions from their data centres, and large-scale data centres are
required to have waste heat recovery applications, when technically and
economically feasible, while meeting climate neutrality by 2030. An earlier EU
regulation, applicable since 2020, sets efficiency standards for data centres
enabling better control over their environmental impact. A self-regulatory
European initiative created in 2021, called the Climate Neutral Data Centre Pact,
sets targets to achieve climate neutrality in the sector by 2030. More than 60 data
centre operators have signed on to the pact, including large operators like Equinix,
Digital Realty and Cyrus One.
In the United States, the Energy Act of 2020 requires the federal government to
conduct studies on the energy and water use of data centres, to create applicable
energy efficiency metrics and good practices that promote efficiency, along with
public reporting of historical data centre energy and water usage. The Department
of Energy (DOE) is supporting the local production of semiconductors and is
funding the development of more efficient semiconductors over the next two
decades. More efficient semiconductors reduce cooling requirements, thus
supporting the decarbonisation of the sector. At a state level, regulators in Virginia
and Oregon have already imposed requirements for better sustainability practices
and carbon emissions reductions.
Chinese regulators will require all data centres acquired by public organisations to
improve their energy efficiency and be entirely powered by renewable energy by
2032, starting with a 5% share mandate for renewables in 2023.
New fields of research can help increase efficiency and
reduce energy consumption in data centres
The primary drivers of data centre electricity demand are the cooling systems and
the servers themselves, with each typically accounting for 40% of the total
consumption. The remaining 20% is consumed by the power supply system,
storage devices and communication equipment. The adoption of high-efficiency
cooling systems has the potential to reduce electricity demand in data centres by
10%. Other cooling research shows that a 20% reduction in consumption can be
achieved when operating with direct-to-chip water cooling and specific low viscous
fluids to cool all other components. Machine learning can help reduce the
electricity demand of servers by optimizing their adaptability to different operating
scenarios. Google reported using its DeepMind AI to reduce the electricity demand
of their data centre cooling systems by 40%.
In the long term, replacing supercomputers with quantum computers could reduce
electricity demand of the sector if the transition is supported by efficient cooling
systems. Quantum computers deliver more and faster processing power than
supercomputers while consuming less energy, but they need to be cooled to
temperatures near absolute zero (-273°C) while supercomputers can operate at
21°C.
Data centres are evolving towards more sustainable and efficient operations,
including transitioning to Hyperscale Data Centres, which can run large-scale
operations without a significant increase in electricity consumption. This transition
is also financially attractive, with the global market for Hyperscale Data Centres
projected to double in size by 2026 compared to 2023, reaching a value of
USD 212 billion.
Another promising field of research for decarbonising data centre operations
involves time and location shifting of electricity demand. Software developments
can allow operators to temporarily shift power loads with carbon-aware models
that relocate data centre workloads to regions with lower carbon intensity at
selected times. Simultaneously, such methodology has shown the probability of
increasing the operational affordability by reducing costs of consuming low-
emissions energy around the clock by up to 34%. Results of this methodology
combined with other energy efficiency measures in place and on-site low-emission
energy production have demonstrated that data centres can achieve a 64% share
of carbon-free energy in their total electricity consumption, according to Google’s
2023 Environmental Report.