AI has the potential to transform the energy sector in the coming decade, driving a surge in electricity demand from data centers around the world while unlocking significant opportunities to cut costs, enhance competitiveness, and reduce emissions, according to a new report from the International Energy Agency (IEA): Energy and AI. The findings were announced in an IEA press release on April 10, 2025.

The IEA report offers a comprehensive, data-driven, global analysis of the connections between energy and AI, drawing on new datasets and extensive consultation with policymakers, the tech sector, the energy industry, and international experts. Key points include:

• Electricity demand from data centers worldwide will more than double by 2030, to around 945 terawatt-hours (TWh).
• The electricity demand from AI-optimized data centers is projected to more than quadruple by 2030.
• U.S. data center power consumption is on course to account for almost half of the growth in electricity demand between now and
• The U.S. economy is set to consume more electricity in 2030 for processing data than for manufacturing all energy-intensive goods combined, including aluminum, steel, cement, and chemicals.
• In advanced economies, data centers are projected to drive more than 20% of the growth in electricity demand between now and 2030.

A diverse range of energy sources will be tapped to meet the rising electricity needs, though renewables and natural gas are set to take the lead, due to their cost competitiveness and availability in key markets.

“AI is one of the biggest stories in the energy world today—but until now, policymakers and markets lacked the tools to fully understand the wide-ranging impacts,” said IEA Executive Director Fatih Birol. “Global electricity demand from data centers is set to more than double over the next 5 years, consuming as much electricity by 2030 as the whole of Japan does today.”

The report emphasizes the uncertainties that remain, from the macroeconomic outlook to how quickly AI will be adopted, noting:

• It is unclear how capable and productive AI will become, how fast efficiency improvements will occur, and whether bottlenecks in the energy sector can be resolved.
• Cyberattacks on energy utilities have tripled in the past 4 years and become more sophisticated because of AI, though AI is also a critical tool for companies to defend against such attacks.
• There is expanding demand for critical minerals used in the equipment in AI data centers, whose global supply is currently highly concentrated.

The report notes that while the increase in electricity demand will drive up emissions, that will be small in the context of the overall energy sector and could potentially be offset by emissions reductions enabled by AI, if adoption of the technology is widespread. And AI could accelerate innovation in energy technologies such as batteries and solar PV.

“With the rise of AI, the energy sector is at the forefront of one of the most important technological revolutions of our time… AI is a tool, potentially an incredibly powerful one, but it is up to us—our societies, governments and companies—how we use it,” noted Dr. Birol.

To access the report, visit www.iea.org/reports/energy-and-ai. For the full press release, visit https://tinyurl.com/3s3zwc3d.