Data centre power demand surges on AI growth, IEA says

By Romel S. Gurky

Electricity demand from data centres rose sharply in 2025, driven by rapid growth in artificial intelligence, according to a report by the International Energy Agency released on Thursday.

The report said data centre power consumption increased by 17% last year, significantly outpacing global electricity demand growth of 3%, while AI-focused data centres expanded even faster.

Capital spending by five major technology companies exceeded US$400 billion in 2025 and is expected to rise by a further 75% in 2026, reflecting continued investment in AI infrastructure.

Despite improvements in energy efficiency per AI task, rising usage and more energy-intensive applications are expected to drive further growth in power demand, with total data centre electricity consumption projected to double by 2030 and AI-related demand set to triple.

Read also: Data centres seen emerging as major new power load in Indonesia

The report also highlighted emerging bottlenecks, including constraints in supply chains for gas turbines, transformrs and advanced chips, as well as delays in grid connections and regulatory approvals.

To address energy needs, technology companies are increasing investment in renewable energy, accounting for about 40% of corporate power purchase agreements in 2025, while also exploring nuclear and advanced geothermal energy options.

The report noted growing interest in small modular reactor projects, with conditional offtake agreements rising to 45 gigawatts.

The IEA said data centre developers are also considering onsite gas-fired power and battery storage solutions to manage fluctuating demand, though such projects face technical and financial challenges.

It added that artificial intelligence could help reduce energy costs in industrial sectors by 3% to 10%, but adoption remains limited due to gaps in digital skills and data availability.

Editing by Reiner Simanjuntak