AI Energy Demand in 2025: Natural Gas in the Spotlight

As we approach 2025, the rapid advancements in artificial intelligence (AI) are set to significantly impact the global energy landscape, with natural gas emerging as a key player. The surging demand for AI processing power will drive a substantial increase in energy consumption, putting natural gas in the spotlight. Let's delve into the reasons behind this trend and explore its implications for the energy sector.

The computational power required for AI is doubling roughly every 100 days, leading to an exponential increase in energy demand. By 2028, AI could be consuming more power than the entire country of Iceland used in 2021 (World Economic Forum, 2024). This increased demand will strain energy sources, particularly natural gas, which is a flexible and abundant resource. Data centers, which account for 1% of global electricity consumption, will grow, potentially leading to local power network strain (IEA, 2024).

Natural gas, with its flexibility and efficiency, will play a crucial role in powering these data centers and AI infrastructure. As AI adoption accelerates, so will the demand for natural gas, driving up its price and potentially straining availability. However, strategic investments in natural gas infrastructure and efficient technologies can mitigate these impacts, ensuring a stable energy supply for AI's growth.

The surge in AI energy demand in 2025 will have significant implications for the global natural gas market. Natural gas producers and utilities with a strong focus on clean energy transition will be well-positioned to meet AI's energy demands while facilitating the global energy transition. Investors should consider exposure to these companies, as the sector will play a crucial role in meeting AI's energy needs.

In conclusion, the surging demand for AI processing power in 2025 will put natural gas in the spotlight, driving significant changes in the global energy market. As AI adoption accelerates, the demand for natural gas will increase, highlighting the need for strategic investments in infrastructure and efficient technologies. The energy sector will play a crucial role in meeting AI's energy demands while facilitating the global energy transition.