Famous tech CEOs, such as Elon Musk, Mark Zuckerberg and OpenAI’s Sam Altman have all warned about a potential global electricity shortage due to the advances in Artificial Intelligence. This has also been echoed by some major investment banks, fuelling excitement and concern in various parts of financial markets. While we consider ourselves AI bulls, we strongly disagree with, for instance, Elon Musk’s statement that the world will run out of electricity and transformers in 2025 due to AI. In this special section we analyse power demand from AI data centres until 2028 using three different approaches and ask ChatGPT 4 for its own assessment.
The conclusion from all 4 methods is that AI will not result in global power shortages anytime soon. While the power use of AI is significant, it is still small compared to other industries, and a smaller driver of global electricity demand than that of electric vehicles. By 2028 we see AI adding around 0.5% to global electricity consumption.
Despite the world not running out of power, AI is likely to have a substantial impact on several energy related sectors over the next few years. The overall market for data centres is currently exploding. Given the much higher energy intensity of GPUs (Graphics Processing Unit) over CPUs (Central Processing Unit), it is resulting in extremely strong demand for electrical power equipment.
Data centres require cheap and green power, water for cooling, relatively cool weather and need to be located close to consumer demand centres. Hence, the buildout of AI data centres will be geographically concentrated, resulting in more meaningful upwards pressure on electricity in some regions. This could benefit local and regional utilities and result in pockets of electricity price inflation.
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