A report from the International Energy Association (IEA) predicts that the demand for AI data centers will triple by 2030.
AI data centers are energy-intensive, requiring large amounts of power for computation. In the UK alone, it is predicted that 140 proposed data center plans could require a total of 50GW of power, which is 5GW more than the country’s current peak electricity demand.
New IEA report – Key questions about energy and AI – Shows how AI is rapidly transforming the world’s electricity use.
According to its analysis, electricity demand from data centers will grow by 17% in 2025, far outpacing the 3% growth in global electricity demand. AI-focused data centers are growing even faster as people leverage energy-intensive applications such as AI agents.
The IEA predicts that by 2030, data center power consumption will double and AI-specific demands will triple.
At the same time, AI data center development increasingly faces various physical and regulatory bottlenecks. For one, the bulging pipeline of data center projects is putting pressure on the power grid, delaying grid connection requests and delaying the planning and approval process.
In contrast, the IEA report highlights that tech companies were responsible for securing around 40% of all corporate renewable power purchase agreements in 2025. These companies are investing in nuclear power and geothermal as a way to enhance their AI efforts.
Additionally, the pipeline of conditional offtake agreements between data center operators and small modular reactor nuclear projects has increased from 25GW at the end of 2024 to 45GW now. For example, Amazon announced last year that it would build a small modular nuclear reactor facility in Washington state to provide carbon-free energy for its data centers.
Constrained by slow grid connections, some US-based data center developers are also investing in on-site energy generation, particularly natural gas. However, IEA data from satellite-based tracking shows that many of these projects are still in their early stages, highlighting the technical and financial hurdles that need to be overcome.
One of the key challenges is that demand for AI data centers can fluctuate rapidly and widely, potentially straining the technical capacity of on-site gas plants to reliably meet power demand. On-site battery storage is therefore becoming a key technology for next-generation AI data centers and, with the right incentives, could become an asset to the grid.
“The IEA recognized early on that without energy there is no AI, and that countries that provide safe, affordable and rapid access to electricity will be one step ahead,” said IEA Executive Director Fatih Birol.
“Today, we see that while AI remains an energy taker, it is also becoming an energy creator, driving innovative solutions such as next-generation nuclear reactors, flexible data centers, and long-term energy storage.”
Last month, big tech companies including Google, Amazon, and OpenAI signed deals with the White House to cover all costs associated with new energy infrastructure needed to power ever-expanding data centers.
An AI data center integrated into a floating offshore wind platform is being developed by US technology startup Aikido Technologies for commercial deployment in 2028.
