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Data Centers to Drive Surging Global Power Demand – IEAData Centers to Drive Surging Global Power Demand – IEA
Global electricity demand is rising, with data centers driving a near-4% annual growth through 2027.
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Data centers are a major driver of global electricity demand.Image: Alamy
Soaring power demands from data centers, industrial production, air conditioning, and the transport sector will drive a 4% annual rise in global electricity production over the next three years, according to the International Energy Agency (IEA).
A new report from the Paris-based organization indicates that the world’s electricity consumption is forecast to rise at its fastest pace in recent years, driven by growth in mature and developing economies.
“Global electricity demand rose by 4.3% in 2024 and is forecast to continue to grow at close to 4% to 2027,” the IEA’s Electricity 2025 report states.
“This is also a sharp acceleration over the 2.5% increase in 2023 when strong gains in China, India, and Southeast Asia were tempered by declines in advanced economies. Over the next three years, global electricity consumption is forecast to rise by an unprecedented 3,500 TWh.”
‘Adding Japan’s Power Demand Each Year’
Putting the data into context, the IEA compared this growth to adding the equivalent of Japan’s total annual electricity consumption to global demand every year.
While the electricity needs of advanced economies remained almost unchanged in 2024 compared with 2021, the IEA said they are expected to account for 15% of global demand growth over the 2025-2027 period.
“Many advanced economies – such as Australia, Canada, the European Union, Japan, [South] Korea and the U.S. – are expected to see electricity consumption rise through 2027 following increases in 2024.”
Key Data Center Growth Markets
Surging demand for data centers features prominently in the IEA report. China, in particular, was highlighted as a key driver of the global power increase.
The organization estimated that data center electricity consumption in China could double by the end of 2027, rising to around 200 TWh.
In the U.S., after a dip in 2023 due to “mild weather and weaker manufacturing activity,” the IEA expects electricity demand to grow by 2% annually from 2025 to 2027 – equivalent to adding California’s total power consumption over three years.
In the EU, electricity demand is gradually recovering but isn’t projected to reach 2021 levels until 2027, as growth in heat pumps, EVs, and data centers is offset by weaker industrial demand, the IEA said.
Embracing a Nuclear Future?
The IEA report follows a study released by Goldman Sachs earlier this month that forecast global power demand from data centers will increase by 50% by 2027 and as much as 165% by the end of the decade.
Amid this soaring demand, the potential for nuclear-powered small modular reactors (SMRs) has been a recurring theme.
“SMRs are particularly receiving increasing attention,” said the IEA. “Plans to build up to 25 GW of SMR capacity associated with supplying data centers have been announced globally, almost all of them in the U.S.”
A previous Goldman Sachs report highlighted nuclear as key to new energy infrastructure for data centers but warned that “nuclear can’t meet all of the increased data-center power needs.”
Looking ahead, Keisuke Sadamori, director of energy markets and security at the IEA, said: “While emerging and developing economies are set to drive the large majority of the growth in global electricity demand in the coming years, consumption is also expected to increase in many advanced economies after a period of relative stagnation. Policymakers need to pay close attention to these shifting dynamics.”
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