Data Centers to Double Energy Use by 2029

The demand for data centers is accelerating at an unprecedented pace, with power consumption expected to double by 2029, according to a new report from JLL. This growth, driven by artificial intelligence (AI) advancements and expanding cloud services, is pushing energy infrastructure to its limits and raising critical questions about the future of power supply.

AI and Cloud Services: The Power Hungry Giants

AI technologies are among the largest contributors to this surge. With their exponential computational needs, AI servers are projected to account for a significant share of new energy demands. Alarmingly, experts predict that half of all AI servers may lack sufficient power by 2027.

Cloud services further compound the issue, as companies rapidly expand storage and processing capabilities. This twin growth of AI and cloud services has outpaced the ability of traditional energy providers to keep up.

Why Power Supply Is Struggling

The mismatch between energy needs and power development timelines is at the heart of the issue. Large power plants often take years to build and commission, while quicker solutions like solar and wind face extensive delays in connecting to the grid.

The problem is intensified by the geographic clustering of data centers. These hubs, typically near major urban areas, are putting immense pressure on local power grids. Utilities, accustomed to planning for slower, incremental growth, are struggling to adapt to AI’s explosive demands.

A Shift to Direct Energy Deals

To address these challenges, data center developers and operators are increasingly turning to direct partnerships with renewable energy and nuclear power developers.

• Google is investing $20 billion in renewable energy projects to supply its massive data centers, and has contracted with nuclear startup Kairos for 500 megawatts of carbon-free electricity by the decade’s end.
• Microsoft is also expanding its renewable energy portfolio and partnering with Constellation to restart a nuclear reactor at Three Mile Island, which was decommissioned in 2019.
• Switch, a major data center operator, has signed a long-term agreement with nuclear startup Oklo for an ambitious 12 gigawatts of power by 2044.

The Challenges Ahead

While these innovative partnerships represent a step forward, the challenge lies in aligning supply with demand. Nuclear reactors, even small ones, face significant regulatory and logistical hurdles, particularly near urban centers where most data centers are located. Renewables, though quicker to deploy, require large tracts of land and extensive transmission infrastructure.

Both nuclear and renewable solutions also face another bottleneck: the construction of new transmission lines. Building these lines can take years, slowing the integration of new energy sources into the grid.

The Future of Power for Data Centers

As data centers continue to grow alongside AI and cloud technologies, the energy sector must evolve rapidly to keep pace. A mix of renewable energy, nuclear power, and advanced grid infrastructure will likely form the backbone of this transformation.

In the coming years, collaboration between energy providers, tech companies, and policymakers will be essential to overcoming these challenges. The data center industry’s ability to adapt will not only define its own success but also shape the future of energy innovation and sustainability.