The world is becoming increasingly digital. The proliferation of artificial intelligence (AI), electrification efforts, the Internet of Things (IoT), and other technologies have contributed to an overwhelming demand for energy. One of the largest power consumers today is the data center industry, which acts as the proverbial backbone of the burgeoning AI boom.
Unfortunately, in the tech industry’s quest to improve efficiency, reduce human error, increase worker safety, slash unnecessary waste, and more, with AI’s help, there has been a looming challenge on the horizon. As the use of AI applications grows, so does the demand for data centers, which require more power to fuel the human-like responses possible in generative AI. This electricity demand is quickly eclipsing what today’s power industry can provide.
The solution seems simple: generate more power. There, however, lies the significant challenge that intersects these two roads. Over the last several years, there has been a united, global push to reduce greenhouse gas emissions and transition toward cleaner energy sources, such as solar, wind, and hydroelectric power. At this point, the limitations of renewable energy technologies will be surpassed by data centers' overwhelming demand for power.
Furthermore, electrification efforts via electric vehicles (EVs) and smart cities will only add to the stress on the limited abilities of current renewable technologies so far.
Data centers are often majorly overlooked portions of today’s current technological landscape. Most consumers don’t realize the ability to store and retrieve information through a data center. To function, data centers enable real-time communication and host the cloud-based applications users utilize to access information from their smartphones.
Data centers support all major smart appliances, acting as the cloud infrastructure behind connected devices that generate data, processing, and storing information. According to the International Energy Agency (IEA), data centers and data transmission networks are responsible for 1-1.5% of global electricity use and, concurrently, 1% of energy-related greenhouse gas (GHG) emissions.
“Since 2010, the number of internet users worldwide has more than doubled,” reports the IEA. “Global internet traffic has expanded twenty-fold.”
In its 2023 report, the IEA stated that despite growing demand for renewable energy purchases by information and communications technology companies, broader decarbonization efforts have helped keep emissions growth modest. However, to achieve more significant climate goals, such as those in the Net Zero Scenario highlighted by the Paris Agreement, GHG emissions must drop by over half by 2030.
The explosion of AI over the last year has led to further demand from the data center industry in the power sector. Data center electricity usage is forecasted to double by 2026, with the IEA saying that, in a worst-case scenario, data centers could consume more than 1,000 terawatt-hours.
The 2024 report by the IEA states that power generation is currently the largest source of carbon dioxide emissions despite its massive attempts to transition to net zero emissions through the expansion of renewable energy sources. Global electricity demand is expected to rise “faster over the next three years, growing by an average of 3.4% annually through 2026.”
These gains will be driven by an improving economic outlook after the downturn following the COVID-19 pandemic. The IEA reports that data centers will be a significant driver of growth in electricity demand for many regions. The 1,000 TWh the industry could achieve would be equivalent to Japan's electricity consumption.
Goldman Sachs found that, due to the amount of electricity required to answer a single query, ChatGPT needs ten times as much energy to process on average as a simple query. Thus, AI will drive data center power demand to grow by 160%.
Today, data centers are, on average, among the largest electricity consumers in their given area. Soon, industry experts argue that they could use more electricity than some cities or entire U.S. states. CNBC reports that Jon Lin, general manager for data center services at Equinix, stated that while developers prefer carbon-free renewable energy, solar and wind alone will not be enough to meet current demand.
“The firmness of the power is still incredibly important for these data centers, and so doing that solely off of local renewables is candidly just not an option,” Lin said. Data centers have to be online for more than 99% of the time, and outages are out of the question, which weather can impact renewable technologies, like wind and solar.
But turning to coal is not the answer. Although coal is another way to produce electricity, utility-scale electric power plants that burn coal produce 2,257 pounds of carbon dioxide per megawatt-hour (MWh), which is sufficiently high compared to other fossil fuels such as natural gas and petroleum. Coal is considered one of the major contributors to climate change, with over 40% of energy-related CO2 emissions being due to coal.
Renewable technologies will be required to meet climate goals. Still, major work must be done to understand their limitations and find scalable solutions to meet the rising power demands from data centers.
Renewable energy technologies are essential for achieving low-carbon objectives, but they face several challenges when trying to meet data centers' vast and continuous power demands. The biggest, of course, is the weather's unpredictability in affecting wind and solar energy. Environmental conditions, including sunlight, wind speed, and geographic location, may not always be able to meet data centers' 24/7 power demands.
For example, peak operational hours for a data center might not align with when the sun and wind are available in optimal quantities. Variability is not a good match for data center power, as these operations require uninterrupted energy streams.
Furthermore, many of the world’s data center campuses are in urbanized areas or near massive technology hubs like Silicon Valley, where wind or solar power might not be as accessible. Renewable energy generation could be found in more rural locations, with abundant available wind or sunlight, but transporting energy gathered at these distant locations can incur significant transportation losses across the power grid, leading to inefficiency and a lack of scalability.
Likewise, there are currently few options for energy storage for renewable energy. Lithium-ion batteries are an example of energy storage for renewable technologies, but they are extremely limited in capacity and cost compared to the large-scale demands for data centers. Existing battery technologies run into problems regarding massive operations like fueling data centers, including energy density, scalability, and lifespan. Large-scale storage systems capable of accomplishing these feats are still in the early stages of development.
Lastly, today’s power grids cannot always handle renewable energy sources. They were built for conventional sources such as coal, natural gas, and nuclear power. The power grid industry will need a whopping trillion-dollar investment in the European Union alone to handle the growing demands of data centers and the increased need for renewable technologies.
Princeton professor Jesse Jenkins, leader of an energy policy project at the university, says the power grid is one of the first places to incorporate more renewable technology.
“A 21st-century grid has to accommodate steadily rising electricity demand to power electric vehicles, heat pumps, industrial electrification, and hydrogen electrolysis, and it needs to extend to new parts of the country to harness the best wind and solar resources. Both factors mean we simply need a bigger grid with more long-distance transmission,” Jenkins told CNBC.
“Throw in resiliency benefits of stronger inter-regional grid connections so a region that’s struggling with an extreme event can call on its neighbors for help, and you’ve got even more reason to build a stronger, bigger grid.”
Renewable energy has limitations, but the significance of these limitations might not be as large as many think. There have been growing concerns that the rising use of AI could lead to technology companies relying on coal-generated power to fill in the gaps. However, reports by the IEA and efforts by tech giants such as Meta, Google, and Microsoft are quickly addressing these possible concerns.
The IEA’s 2024 report on global electricity usage proposed a 1,000 TWh demand as a worst-case scenario and argues that record-breaking electricity generation from low-emission sources, including renewables and nuclear technologies, has occurred.
These low-emission sources are forecast to “account for almost half of the world’s electricity generation by 2026, up from 39% in 2023. Over the next three years, low-emissions generation is set to rise twice the annual growth rate between 2018 and 2023–a consequential change, given that the power sector contributes the most to global carbon dioxide emissions today.”
The IEA found that renewables are set to provide more than one-third of total electricity generation globally by early 2025, overtaking coal. That is even with the explosive demand for data centers. The driving force originates from the growth of cheaper solar photovoltaic (PV) technology. This growth will displace the fossil fuel supply and see a remarkable explosion inside China, rapidly expanding its renewable energy sources. Coupled with the country’s rich share of raw materials used in renewable technology, China can quickly shift from fossil fuels to renewable energy without costly investments.
Similarly, as the strain on data centers grows, tech giants creating new AI applications have focused on hybrid energy models, which combine renewable energy with low-carbon power sources such as nuclear energy or natural gas. The goal is to have renewables as the primary power source with a low-emissions secondary source as a backup during periods of low renewable output. While this still requires a stronger power grid to support such interchangeability, governments worldwide have been steadily working on improving their decades-old power systems.
In addition, data centers can significantly reduce their overall energy consumption through better energy efficiency measures. Optimizing cooling systems, using more efficient servers and processors, and utilizing AI to manage energy use can all help reduce the overall energy demand of data centers. Moreover, adopting energy-efficient designs in data center architecture and operations can lessen the pressure on renewable energy sources.
As the global digital landscape expands, data centers' energy demands will only increase, presenting significant challenges for meeting emissions goals due to their dependence on power. However, renewables' variability, coupled with issues like energy storage, infrastructure constraints, and geographic mismatches, create a complex set of problems for data centers seeking to reduce their carbon footprint.
Concerns about the impact of the growing power demand on data centers, combined with the limited availability of renewable technologies, have risen in the last year. Addressing these problems will be necessary to meet the goals outlined in global climate initiatives like the Paris Agreement.
However, continued investment in renewable technologies, improved energy efficiency, and hybrid solutions can meet data centers' growing power demands while moving toward a more sustainable energy future. The key will be modernizing the existing power grid infrastructure, using renewable technologies, and committing to zero net emissions goals.
To achieve these goals, working alongside a global electronic component distributor that targets sustainability and efficiency will be essential to partnering with franchises that help organizations of all sizes pursue breakthroughs in renewable energy. Sourceability’s franchise partners and digital tool suite make it easy to source energy-efficient components quickly. Sourceability’s team of experts makes it easy to find the components you need and sell the ones you don’t without further contributing to the growing e-waste problem.
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