Electricity consumption by data centres globally is anticipated to increase dramatically, potentially quadrupling by 2035, according to a recent report from BloombergNEF. This surge in demand, largely driven by the rapid expansion of artificial intelligence (AI) computing, is predicted to push global data centre capacity to nearly 200 gigawatts over the next decade. The report highlights that almost half of this new capacity will be dedicated to AI training and inference, with a significant concentration expected in the United States.
The scale of this projected increase is substantial; by 2033, if AI adoption continues at an aggressive pace, data centres could generate 1,935 terawatt-hours of new electricity demand globally. This figure is almost equivalent to India's entire annual electricity consumption. These forecasts represent a significant upward revision from previous estimates, with BloombergNEF's 2035 electricity demand projection now 83% higher than its December prediction, reflecting the accelerated pace of data centre development.
The implications for energy grids are already being felt, particularly in regions with high concentrations of data centres. In the US, for instance, grid operators like PJM Interconnection, which covers an area from Virginia to Illinois, are facing immense pressure. PJM expects 34% of its electricity to go to data centres, while ERCOT, serving most of Texas, could see 22% of its generating capacity dedicated to them. PJM has previously paused applications for new grid connections due to strain, and despite reopening its queue in April, the supply-demand imbalance has led to electricity price increases of 76% over the past year in some areas.
While the immediate and most acute pressure points are currently observed in the United States, which is projected to host 64% of AI chips by power demand by 2033, the global nature of data centre expansion means other nations, including the UK, will also need to address similar challenges. The UK has a growing digital economy and hosts numerous data centres, meaning the projected global surge in electricity demand will undoubtedly place additional strain on its own national grid and energy infrastructure.
For the UK, this trend underscores the critical need for robust energy planning, investment in renewable energy sources, and grid upgrades to accommodate future demand. The potential for increased electricity prices and the challenge of maintaining grid stability are significant concerns. The UK Government and energy regulators will need to closely monitor these developments to ensure energy security and affordability for British households and businesses as the digital economy continues to expand.