Global electricity demand from data centres will more than double in the next five years as tech firms continue to rollout new AI models, although the technology itself has the potential to radically transform the energy sector, according to a new report from the International Energy Agency (IEA).

The IEA’s special report, Energy and AI, projects that electricity demand from data centres worldwide will reach 945 terawatt-hours (TWh) by 2030, slightly more than the entire electricity consumption of Japan today, with demand from AI-optimised data centres projected to more than quadruple in that time.

In the US, where most of the biggest and energy-hungry AI firms are based, consumption by data centres is on course to account for almost half of the growth in electricity demand between now and 2030.

With American AI companies looking to crunch ever more data to build and train new models, the report forecasts that 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.

Meanwhile, China, fast becoming the US’s main AI competitor, is expected to see an even sharper demand for power, rising by as much a 170% to 2030, and an increase of around 175 TWh, dwarfing that of Europe, which the IEA predicts will rise by only 70% over the next few years.

In advanced economies more broadly, data centres are projected to drive more than 20% of the growth in electricity demand, a need which will require a more diverse range of energy sources to meet the appetite of AI data centres.

Renewables remain the fastest-growing source of electricity for data centres, and should meet nearly 50% of the growth demand by 2030, coal is still the largest source of electricity with a share of about 30%, driven mainly by China, while natural gas is the the third-largest source today, providing 40% of power for US data centres.

However, as AI becomes increasingly integral to scientific discovery, the report finds that it could accelerate innovation in energy technologies such as batteries and solar PV as well as finding more efficiencies, helping to lower emissions and even cutting global electricity demand over the long-term.

Getting to that point may be tricky over the short term, though, with research from Gartner predicting that 40% of existing AI data centres will be operationally constrained by power availability by 2027. 

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“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 Fatih Birol, IEA executive director.

“AI is a tool, potentially an incredibly powerful one, but it is up to us – our societies, governments and companies – how we use it. 

“The IEA will continue to provide the data, analysis and forums for dialogue to help policy makers and other stakeholders navigate the path ahead as the energy sector shapes the future of AI – and AI shapes the future of energy.”

The UK Government has recently stepped up its response to the AI power issue, with the first meeting of the UK’s new AI Energy Council taking place this week to advise on improving energy efficiency in AI and data centre infrastructure, as well as working with Ofgem and the National Energy System Operator to deliver reforms to the UK’s connections process.

Big tech firms have also taken a stance in light of spiralling energy prices. A study from the Social Market Foundation, commissioned by Amazon and OpenAI, found that the cost of industrial electricity, planning restrictions, and long delays in grid connection are hindering data centre development in the UK, and placing the country well behind its economic peers in terms of overall AI capacity.