Plan for AI data center power usage or face the consequences, energy companies told
As US energy companies continue to grapple with the challenge of supplying enough power to meet the growing demand for AI data centers, a report from Bain & Company has revealed power use could soon exceed actual supply.
The report forecasts that by 2028, utility companies will need to increase annual generation by as much as 26% in order to keep up with demand.
The concerning outlook raises questions about the true eco-credentials of the time-saving and productivity-enhancing technology, which could soon need to rely on dirtier energy sources which are more abundant.
Data centers will use more energy than we currently have
Indicative of the scale of the problem, capital expenditure at these data centers is anticipated to rise nearly 30% this year alone. A separate study (via The Register) by Rystad Energy, a research and business intelligence company, found that US data center power consumption could more than double by the end of the decade.
Typically, historical energy generation has been several hundred terawatt hours higher than historical energy consumption, however over the next four years, even the low-end demand scenario could outpace current generation, with the high-end demand scenario rising by as much as 1,000 TWh, from 4,000 to 5,000 TWh, marking a significant jump.
By 2028, Bain & Company reckons that data centers will account for more than two-fifths (44%) of all US energy consumption, with residential applications standing at around one-quarter (27%). Manufacturing (17%) and commercial (13%) are set to take smaller percentages.
Adding to the complexity, other sectors like electric vehicles and repatriated manufacturing amid geopolitical tensions are also driving up energy demand in coming years.
Subsequently, the consulting firm warns that failing to act by modernizing business operations and infrastructure could cause companies to lose out on substantial revenues, even forcing datacenter companies to generate their own energy.
And with US utility companies accustomed to flat or even shrinking demand, the fact that global data center energy demands could top $2 trillion represents a significant growth opportunity for those prepared to make the changes.
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As US energy companies continue to grapple with the challenge of supplying enough power to meet the growing demand for AI data centers, a report from Bain & Company has revealed power use could soon exceed actual supply. The report forecasts that by 2028, utility companies will need to increase…
