Datacenters and Electricity Demand: IEA’s Forecast for 2026

The International Energy Agency (IEA) has released its latest report, projecting a potential doubling of global electricity demand from datacenters by 2026. The report suggests that IT infrastructure, encompassing data centers, cryptocurrencies, and artificial intelligence, accounted for about 2% of total electricity demand, approximately 460 Terawatt hours (TWh) in 2022. Projections anticipate this demand to surge between 620-1,050 TWh by 2026, equivalent to adding the power needs of a country the size of Sweden or Germany.

Breaking down the global scenario, the IEA notes that around 33% of the 8,000-plus datacenters worldwide are situated in the United States, followed by 16% in Europe and 10% in China. The report predicts a significant growth in energy consumption in U.S. data centers, driven by the adoption of 5G networks and cloud-based services, reaching almost 260 TWh by 2026, around 6% of total electricity.

China is expected to outpace the U.S., with datacenter electricity demand likely to double to 400 TWh by 2030 and reach 300 TWh by 2026. In Europe, datacenter electricity consumption is estimated to be just under 100 TWh in 2022, set to rise to almost 150 TWh by 2026.

A notable case is Ireland, where datacenters accounted for 17% (5.3 TWh) of the country’s total electricity in 2022. If unchecked, datacenters are projected to use 32% of Ireland’s total electricity by 2026. The IEA attributes this trend to factors like the increased adoption of AI and cryptocurrencies.

The report acknowledges the rising demand from trends like AI and cryptocurrencies, with Google Search’s potential tenfold increase in electricity demand if AI is fully integrated into all searches, requiring almost 10 TWh of additional electricity annually. Cryptocurrencies, consuming about 110 TWh in 2022, are expected to witness a 40% surge in demand by 2026, reaching around 160 TWh.

On a positive note, the IEA anticipates that clean energy sources will meet the rising demand, with renewables projected to generate over one-third of the world’s electricity by 2025, surpassing coal as the leading source. Low-carbon sources, combining renewables and nuclear, are forecasted to contribute 46% or nearly half of the world’s electricity supply by the end of 2026.

Moreover, the IEA predicts a decline in carbon dioxide emissions from the electricity sector, estimating a 2.4% reduction in 2024, followed by further declines of 0.5% in both 2025 and 2026. The decreasing trend is attributed to factors such as the structural decline of coal use in China and the significant growth in renewables.

While IEA Executive Director Fatih Birol emphasizes the need for more progress in decarbonization, he views these trends as promising, stating that renewables and nuclear power are on track to meet the increasing global electricity demand over the next three years.

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