The landscape of global electricity consumption is undergoing significant changes as we advance toward 2025. The latest World Energy Outlook report from the International Energy Agency sheds light on key trends influencing electricity demand, costs, and the interplay with artificial intelligence (AI). A notable prediction indicates a 40% increase in electricity demand over the next decade, driven primarily by population growth and economic expansion. While China has historically been the leader in electricity consumption growth, emerging economies are expected to capture a larger share of this demand moving forward. Despite stagnant consumption in advanced economies like the U.S. and Europe, the rise of AI and data centers is anticipated to spur growth in these regions as well.
One of the key contributors to rising electricity demand is increased access to air conditioning in developing nations, which is projected to add around 330 gigawatts to global peak demand by 2035. Additionally, as global temperatures rise, another 170 gigawatts will be required to meet the cooling needs of the population. This combined increase reflects a 10% rise from 2024 levels, emphasizing the urgent need for a robust and sustainable energy infrastructure.
AI’s impact on energy demand is significant, particularly in the U.S., where data centers are expected to account for half of the total electricity demand growth by 2030. However, it’s essential to note that data centers represent less than 10% of the overall increase in electricity demand projected through 2035. Other sectors, including industry and household appliances, will contribute more significantly to this demand surge. As data centers tend to be clustered in urban areas, their concentrated energy needs present challenges for local grids and communities.
As we evaluate the implications of rising electricity demand on climate change, it becomes crucial to consider the sources of this power. Currently, fossil fuels dominate the global energy mix, contributing to greenhouse gas emissions with each increment in electricity consumption. However, a shift is underway, with solar and wind energy becoming the predominant sources of electricity in the first half of this year, surpassing coal for the first time. The use of coal may peak and decline by the end of this decade, while an increase in nuclear energy generation could also play a pivotal role in transitioning away from fossil fuels. Looking ahead, approximately 80% of the anticipated electricity demand growth is expected to occur in regions with high solar energy potential, underscoring the importance of renewable energy in addressing climate change.
In summary, while positive strides are being made in the energy sector, urgent action is necessary to accelerate the transition to a sustainable electricity system. With global emissions on track to reach record levels this year, a comprehensive overhaul of our energy infrastructure is essential to mitigate the severe impacts of climate change.
Source: Three things to know about the future of electricity via MIT Technology Review