As data center industry grows, so do energy demands

Data centers keep growing in importance to the tech industry—and with that importance comes rising energy needs.

That demand for energy is already making waves. McKinsey’s Global Energy Perspective 2025 projects that, by 2030, data centers could constitute more than 14% of US national demand; growth in the infrastructure in North America dwarfs the rest of the world.

Diego Hernandez Diaz, a McKinsey researcher who led the report, told IT Brew that data centers could exceed the annual global growth rate of 17% a year if they can get energy off-grid. But there are challenges to making that a reality, not the least of which is finding alternative energy sources.

“That number can grow higher if we are able to solve some of the grid connection constraints that exist in the system today and or if demand further increases above and beyond what we are seeing,” Diaz said, “which obviously necessitates alternative measures to be explored.”

Sources on tap. For many in the data center space, that means nuclear power. Companies like Amazon are investing in the technology and the White House is prioritizing it alongside natural gas. And with other energy resources still in development, energy demand will continue to be a concern as part of data and AI sector growth.

Just how high that demand will actually reach remains unclear. Electric and energy utility companies are still trying to work out just how much demand is real. Rob Gramlich, Grid Strategies president, told CNBC that while the infrastructure isn’t there to satisfy projected demand, “the industry’s got to plan based on the best information we have at the moment.”

New horizons. Mikey Lucas, founder of the American Energy Fund, told IT Brew that the billions being spent on AI and data centers present a new “Wild West”-style frontier where the demand for energy is like the demand for land. That means a major increase in need that can’t be fulfilled by the grid.

“In reality, the grid cannot keep up with AI, and we all know that,” Lucas said. “A lot of these sites will have on-site generation—they don’t have a choice, because if they don’t have on-site generation, then they’re going to have to wait six to 15 years just to get interconnected because of the red tape with utility companies.”

Whatever solution they come to, the sooner the better.

“The three grids that are in the United States are already at, essentially, peak,” Lucas said.

Hybrid solutions. Diaz believes that the solution is somewhere in the middle: a hybrid of on- and off-grid. Centers with their own generation facilities and the ability to connect to the grid is the “optimal setting,” he said, allowing for the reliability that AI needs.

“That allows you to deliver on the premise that a lot of these guys operate on, five nines reliability—they need to be up 99.999% of the time,” Diaz said. “To do that, you need to have access to the power for the same amount of time.”