The rapid rise of artificial intelligence is putting unprecedented pressure on electricity grids worldwide, the International Energy Agency has warned.
The IEA said there has been a step change in the capabilities of artificial intelligence, driven by falling computation costs, a surge in data availability and technical breakthroughs.
Specifically, the IEA stated that “electricity grids are already under strain in many places” and that, unless risks are addressed, “around 20 per cent of planned data centre projects could be at risk of delays.”
It explained that grid connection queues are long and complex and that building new transmission lines and installing critical components like transformers and cables can take years.
The report also said that meeting data centre load growth could require trade offs with other energy sector goals such as electrification, manufacturing growth, or affordability if the electricity sector does not keep up.
It disclosed that data centres, where AI models are trained and deployed, accounted for around 1.5 per cent of the world’s electricity consumption in 2024, or 415 terawatt hours.
The IEA said, “Data centre electricity consumption is set to more than double to around 945 TWh by 2030. This is slightly more than Japan’s total electricity consumption today.”
The United States, China and Europe are projected to account for most of this growth.
In the United States, the agency noted, “Data centres account for nearly half of electricity demand growth between now and 2030. By the end of the decade, the country is set to consume more electricity for data centres than for the production of aluminium, steel, cement, chemicals and all other energy-intensive goods combined.”
The agency said AI-focused accelerated servers are driving the increase.
While data centres remain a small share of global electricity, the IEA warned that “AI-focused data centres can draw as much electricity as power-intensive factories such as aluminium smelters, but they are much more geographically concentrated.”
Nearly half of US data centre capacity is located in five regional clusters, raising local grid risks. The IEA added that “unless these risks are addressed, around 20 per cent of planned data centre projects could be at risk of delays.”
The agency said addressing these challenges requires careful planning.
“Key options to mitigate these risks include locating new data centres in areas of high power and grid availability and operating either data centre servers or their onsite power generation and storage assets more flexibly,” the report noted.
However, the IEA highlighted the role of AI in managing the energy system.
“AI is already being deployed by energy companies to transform and optimise energy and mineral supply, electricity generation and transmission, and energy consumption. There are numerous objectives in play, including reducing costs, enhancing supply, extending asset lifetimes, reducing downtime and lowering emissions,” the report said.
The agency added that AI could improve the capacity of transmission lines, reduce curtailment of renewable energy, and help detect faults, noting that “up to 175 gigawatts of transmission capacity could be unlocked if these tools are applied, without any new lines being built.”
The report also cautioned on energy security and critical materials, saying, “AI compounds some energy security risks, but it also offers solutions in both the cyber and physical domains,” highlighting that “China currently accounts for around 99 per cent of global refined gallium supply.”
The agency made a call for collaboration, saying, “Delivering the energy for AI, and seizing the benefits of AI for energy, will require even deeper dialogue and collaboration between the tech sector and the energy industry.
“Along the way, there will be risks to manage. The IEA will continue to provide data and robust analysis to inform decision-making and help the energy and technology sectors be better prepared as the adoption of AI unfolds.”
