AI has the potential to considerably impact the energy sector in the coming decade, driving a surge in electricity demand from data centres around the world, the International Energy Agency’s (IEA’s) ‘Energy and AI’ report posits.

It projects that electricity demand from data centres worldwide is set to more than double by 2030 to an estimated 945 TWh.

AI is expected to be the most significant driver of this increase, with electricity demand from AI-optimised data centres projected to more than quadruple by 2030.

In the US, power consumption by data centres is on course to account for almost half of the growth in electricity demand between now and 2030.

Driven by AI use, 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.

In advanced economies more broadly, data centres are projected to drive more than 20% of the growth in electricity demand between now and 2030.

Several energy sources would be used to meet data centres’ rising electricity needs, according to the report, however, renewables and natural gas are set to dominate owing to their cost-competitiveness and availability in key markets.

The report emphasises the significant uncertainties that remain, from the macroeconomic outlook to how quickly AI will be adopted.

It also notes questions over how capable and productive AI will become, how fast efficiency improvements will occur, and whether bottlenecks in the energy sector can be resolved.

AI could intensify some energy security strains while helping to address others, according to the report.

Cyberattacks on energy utilities have tripled in the past four years and become more sophisticated because of AI.

At the same time, energy companies are using AI to defend against such attacks.

Another energy security concern relates to the expanding demand for critical minerals used in the equipment in the data centres that power AI.

The report provides pioneer estimates of demand from data centres for critical minerals, whose global supply is today highly concentrated.

The increase in electricity demand for data centres is set to drive up emissions. However, it could potentially be offset by emissions reductions enabled by AI if adoption of the technology is widespread, the report posits.

Moreover, with AI use in scientific discovery, it could accelerate innovation in energy technologies such as batteries and solar PV, the report shows.

According to the report, countries that want to benefit from the potential of AI need to accelerate new investments in electricity generation and grids, improve the efficiency and flexibility of data centres and strengthen the dialogue between policy makers, the tech sector and the energy industry.