AI Data Centers to Drive 165% Surge in Global Electricity Demand by 2030

The rapid ascent of artificial intelligence (AI) is fundamentally altering global energy demand, with data centers at the epicenter of this transformation. According to projections by a leading financial institution, by 2030, AI data centers are expected to drive a 165% surge in global electricity demand compared to 2023 levels. This dramatic increase underscores the immense energy requirements of AI technologies and their potential to reshape infrastructure and energy strategies worldwide.

In the United States, data center construction spending has doubled over the past three years, driven by the need to accommodate the vast computational resources required by AI applications. Despite this rapid growth, third-party facilities in most major markets are nearing full capacity, highlighting the urgent need for additional infrastructure to support the escalating demand.

The institution's senior stock analyst for digital infrastructure research predicts a significant increase in global data center market electricity demand over the next five to six years. Currently, global power consumption stands at approximately 55 gigawatts, with over half dedicated to cloud computing. Traditional workloads such as email and storage account for about one-third, while AI currently consumes only 14%. By 2027, total consumption is projected to reach 84 gigawatts, with AI's share rising sharply.

The growth in electricity demand is not only quantitative but also qualitative. The average power density is expected to increase from the current 162 kilowatts per square foot to 176 kilowatts by 2027. The supply of data centers, particularly new additions, has been constrained over the past 18 months. The rising power density and demand present significant challenges. However, from a long-term perspective, data center emissions intensity could see a substantial decline, potentially even reducing absolute emissions.

For instance, a single ChatGPT query requires approximately 2.9 watt-hours of electricity, nearly ten times that of a Google search. When scaled to millions of interactions, the load increases rapidly. The institution has modeled three scenarios for this growth. The baseline scenario predicts a 50% increase in demand by 2027, reaching 92 gigawatts. A slower AI adoption scenario sees a 14% increase, while a faster adoption scenario could drive annual growth rates to 20%.

Europe faces a significant challenge with approximately 170 gigawatts of data center projects in the pipeline, equivalent to one-third of the continent's current electricity usage. The institution's managing director of stock research notes that the turning point in electricity demand is crucial, as Europe's demand has been declining for 15 consecutive years. By 2030, Europe's data center electricity demand is projected to equal the combined usage of Portugal, Greece, and the Netherlands.

Meeting the escalating electricity demand will require unprecedented investment. In the United States alone, utility companies will need to invest 50 billion dollars in new generating capacity for data centers. Globally, the cost of upgrading the power grid by 2030 could reach 720 billion dollars.

The institution's global research vice president emphasizes the complexity and constraints of retrofitting existing facilities to support the massive leap in power density. New, AI-specific infrastructure will be necessary to drive the next generation of technology. Historically, efficiency improvements have kept overall power consumption stable, but these gains have slowed as AI demand accelerates. The institution forecasts that 40% of new power capacity will come from renewable sources, with onshore wind and solar energy being more cost-competitive than natural gas. However, the intermittent nature of renewable energy means hybrid solutions, combining green power, batteries, and natural gas, will remain essential.

As tech companies seek reliable, low-carbon baseload options, nuclear power is regaining favor. In the United States, over 10 gigawatts of new nuclear capacity contracts have already been signed. The industry's commitment to sustainability aligns with nuclear investment, and shifting political attitudes in markets like the United States and Switzerland are paving the way for more new nuclear reactors.

New AI models could alter predictions by improving computational efficiency. However, the institution maintains that even with hardware and algorithmic advancements, the scale of AI adoption will continue to drive substantial data center demand. Cooling systems, which account for up to 40% of energy consumption in large-scale operations, will remain a key focus for efficiency improvements. In the long term, as new power sources and infrastructure strategies are implemented, data center emissions intensity could see a significant decline, potentially even reducing absolute emissions.