AI News Monitor

Electricity demand is on the rise, growing by 4.3% in 2024 and expected to continue climbing at nearly 4% annually through 2027, according to a new report from the International Energy Agency (IEA). While headlines often point to data centers and AI as the culprits, the story is far more complex—and global.

The Big Drivers: China, India, and Southeast Asia
The bulk of this growth—about 85%—is coming from developing and emerging economies, with China leading the charge. In 2024 alone, China accounted for over half of global electricity demand growth. The country’s booming heavy industry, skyrocketing adoption of air conditioners, and robust electric vehicle (EV) market are major contributors. For perspective, the energy used to produce solar panels, batteries, and EVs in China last year equaled Italy’s total annual electricity consumption.

India and Southeast Asia are also seeing above-average demand growth, fueled by economic expansion and rising air conditioner use. Meanwhile, 600 million people in Africa still lack reliable electricity, signaling even more potential growth ahead.

Data Centers: A Smaller but Significant Factor
While data centers are often in the spotlight, they’re expected to account for less than 10% of global electricity demand growth through 2030. However, their impact is more pronounced in advanced economies like the U.S. and Europe, where they’re reversing years of flat or declining electricity demand. For example, the 10 U.S. states with the most data center growth saw a 10% increase in electricity demand between 2019 and 2023, while demand in the other 40 states fell by 3%.

The future of data centers—especially those powering AI—remains uncertain. Projections vary widely, and small changes could significantly alter their energy needs. China, for instance, could see data center electricity demand double by 2027.

What This Means for Climate Change
Rising electricity demand isn’t inherently bad for the climate. For example, switching from gas heaters to heat pumps can reduce emissions even as electricity use grows. The challenge lies in ensuring that new demand is met with clean energy.

The good news? Renewable energy is expanding rapidly. Solar power alone is expected to cover half of the demand growth through 2027, and nuclear power is also set to rebound, with new reactors coming online in China and India. However, fossil fuels still dominate many grids, and low-carbon sources must grow fast enough not just to meet new demand but to replace existing dirty energy.

As the world races to electrify everything from cars to factories, keeping up with this demand while cutting emissions will be a monumental task—one that will shape the future of our planet.