The rapid expansion of artificial intelligence (AI)-driven data centres and a wave of industrial reshoring are driving a surge in global electricity demand, with power markets scrambling to secure reliable supply. Global energy analyst Wood Mackenzie warns that in the US alone, electricity consumption is rising by as much as 3% per year.
While renewables are expanding, natural gas is proving to be a key stopgap solution, particularly in the US, Europe, and parts of Asia, as power grids struggle to keep up with AI-driven demand. But high costs and emissions scrutiny raise questions about whether gas can remain competitive in the long term.
Investment in AI and data centre infrastructure is now exceeding that of the entire US oil and gas industry. The International Energy Agency (IEA) reports that Google, Microsoft, and Amazon spent more on AI and data centres in 2023 than the entire US oil and gas sector, amounting to 0.5% of US GDP.
AI’s electricity needs could soon rival those of major industries, says the IEA. “Large hyperscale data centres, which are increasingly common, have power demands of 100 MW or more,” the report states. That is the equivalent of 350,000 to 400,000 electric cars annually.
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