The AI Boom and Global Temperature Increases Are Fueling Unprecedented Electricity Usage

A surge in global electricity demand, fueled by rising temperatures, economic growth, and the AI boom, is set to reach its fastest pace in nearly two decades, according to a new report from the International Energy Agency.

Record-breaking demand growth: The IEA forecasts that global electricity demand will grow by approximately 4% in 2024 and 2025, the highest annual growth rate since 2007, excluding exceptional rebound years following the global financial crisis and COVID-19 pandemic.

• Intense heatwaves in the first half of 2024 have already boosted demand and strained electricity systems, with increasing use of air conditioning expected to be a key driver of growing power demand as climate change pushes temperatures higher.
• The rapid deployment and expanding uses of artificial intelligence are also expected to contribute significantly to rising electricity demand in the coming years, although the precise impact remains uncertain due to limited data on data center energy consumption.

Regional variations: Demand growth is expected to be particularly strong in certain regions and countries:

• India is projected to see an 8% surge in electricity demand this year, while China is expected to experience growth of more than 6%.
• In the United States, demand is expected to rebound by 3% amid steady economic growth, an expanding data center sector, and rising demand for cooling.

Renewable energy on the rise: Despite the challenges posed by growing electricity demand, renewable sources of energy are set to expand sharply and play an increasingly important role in meeting global energy needs.

• The IEA report projects that renewables will make up 35% of global electricity by 2025, a five percentage point increase from last year.
• Solar power alone is expected to meet roughly half of the global growth in electricity demand in 2024 and 2025, with solar and wind combined meeting as much as 75% of growth.
• In a significant milestone, the amount of electricity generated from renewables globally is forecast to surpass electricity generated from coal for the first time in 2025.

Broader implications: The IEA’s findings highlight the urgent need for countries to accelerate the transition to clean energy and implement energy efficiency measures to mitigate the impacts of rising electricity demand on power systems and the climate.

• While the growing share of renewables in the electricity mix is encouraging, Keisuke Sadamori, the IEA’s Director of Energy Markets and Security, emphasizes that this needs to happen at a much faster rate to meet international energy and climate goals.
• Expanding and reinforcing electricity grids to provide secure and reliable supply, as well as implementing higher energy efficiency standards, particularly in the cooling sector, will be crucial in managing the challenges posed by the global electricity surge.