Plan for AI data center power consumption or face the consequences, energy companies told us
As U.S. energy companies continue to grapple with the challenge of providing enough power to meet growing demand for AI data centers, a report from Bain & Company has revealed that power consumption could soon exceed actual supply.
The report predicts that utilities will need to increase annual production by as much as 26% by 2028 to meet demand.
The worrying outlook raises questions about the true environmental credentials of the time-saving and productivity-enhancing technology, which could soon rely on dirtier energy sources that are in abundance.
Data centers will consume more energy than we have now
An indication of the scale of the problem is that capital expenditure in these data centers is expected to increase by almost 30% this year alone. A separate study (via The registry) from Rystad Energy, a research and business intelligence company, found that the energy consumption of U.S. data centers 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, but over the next four years even the low demand scenario could exceed current generation, with the high demand scenario increasing by as much as 1,000 TWh. , from 4,000 to 5,000 TWh, which represents a significant jump.
Bain & Company estimates that by 2028, data centers will account for more than two-fifths (44%) of all US energy consumption, while residential applications will account for about a quarter (27%). The industrial sector (17%) and the commercial sector (13%) are expected to take smaller percentages.
Adding to the complexity, other sectors such as electric vehicles and repatriated manufacturing will also increase energy demand in the coming years amid geopolitical tensions.
The consultancy then warns that failure to modernize operations and infrastructure could cause companies to lose significant revenue, even forcing data center companies to generate their own energy.
And with U.S. utilities accustomed to flat or even shrinking demand, the fact that global energy demand for data centers could exceed $2 trillion presents a significant growth opportunity for those willing to make the changes.