Global electricity demand is surging — but AI is only a small part of the story

The global electricity landscape is undergoing significant transformation, with demand rising 4.3% in 2024 and projected to maintain nearly 4% annual growth through 2027. While recent media attention has focused on data centers and AI power consumption, the actual drivers of electricity demand are more diverse and complex.

Key growth drivers: Developing and emerging economies, particularly in Asia, are responsible for the majority of increased electricity consumption.

• China alone accounted for over half of global electricity demand growth in 2024, with its solar module, battery, and electric vehicle production consuming as much electricity as Italy uses annually
• India and Southeast Asia are experiencing above-average demand increases due to economic growth and rising air conditioner adoption
• Approximately 600 million people in Africa still lack reliable electricity access, indicating significant potential for future demand growth

Data center impact: While data centers receive significant media attention, their global electricity demand impact remains relatively modest compared to other sectors.

• Data centers are projected to account for less than 10% of global electricity demand growth through 2030
• In advanced economies like the US and Europe, data centers are reversing previously flat or declining electricity demand trends
• The 10 US states with the highest data center concentration experienced a 10% electricity demand increase from 2019-2023, while demand declined 3% in other states

Industrial and consumer factors: Multiple sectors are driving electricity consumption growth across different regions.

• Heavy industry expansion, increasing air conditioner usage, and electric vehicle adoption are major demand drivers in China
• The manufacturing of clean energy technologies, including solar panels and batteries, is creating substantial new electricity demand
• Economic development in emerging markets is spurring increased energy consumption across multiple sectors

Renewable energy response: Clean energy deployment is keeping pace with demand growth, though challenges remain.

• Solar power expansion alone is expected to meet half of the projected demand growth through 2027
• Nuclear power is experiencing a renaissance with new reactors in China and India, and renewed operations in France and Japan
• Despite renewable energy growth, existing fossil fuel plants continue to operate, complicating emissions reduction efforts

Looking ahead: The increasing electricity demand presents both opportunities and challenges for global development and climate goals, requiring careful balance.

• The growth in electricity demand reflects positive developments like increased access to cooling and clean technology manufacturing
• However, meeting this rapid demand growth while simultaneously replacing fossil fuel generation presents a significant challenge
• China’s potential doubling of data center demand by 2027 could add another layer of complexity to the country’s already substantial electricity consumption

Future implications: The evolving electricity landscape requires careful management of competing priorities between development needs and environmental goals.

• While increased electricity access and industrial growth support economic development, maintaining clean energy deployment at a pace that exceeds demand growth remains crucial
• The success of emissions reduction efforts will depend on both managing demand growth and accelerating the transition to clean energy sources
• Regional variations in electricity demand drivers suggest the need for tailored approaches to energy policy and infrastructure development