Data Centers Consuming Massive Amounts of Energy, Report Says

Data centers are expected to grow to 6% of American energy consumption by 2026

Data Centers Consuming Massive Amounts of Energy, Report Says

WASHINGTON April 22, 2024—Data centers, spaces in buildings dedicated to house computer systems and related components, are consuming an alarming amount of energy, a report from Jaymie Scotto & Associates reads. 

The report argues that data centers devour over 460 terawatts of electricity on the annual basis. The growing use of artificial intelligence and cryptocurrency mining will likely cause energy consumption to exceed 1000 terawatts per day by 2026, roughly equivalent with the entire county of Japan, the report argues. 

With the number of data centers projected to increase in the coming years, slashing energy consumption has become a point of concern. American data centers are expected to grow from 4% to 6% of domestic energy consumption by 2026, per the report.

The surge in demand will be attributed to the proliferation of 5G networks, cloud-based networks, and state-level tax incentives, the report argues. Data center consumption is expected to increase in both China and the European Union during the same time frame. 

Electricity consumption is expected to see an uptick in the upcoming years as a result of a spike in manufacturing activity and electrification in transportation, the report says. Around one-third of the growth in demand is expected to come from the data center sector, the report argues. Moreover, projects backed by the Biden administration’s 2022 Inflation Reduction Act and Bipartisan Infrastructure Law are expected to ramp up during this window.

“Projects supported by the U.S. government’s 2022 Inflation Reduction Act and the bipartisan infrastructure law through special financial vehicles, grants, tax credits, loan guarantees, among other incentives, are assumed to accelerate over our forecast period,” the report says. 

“As of November 2023, the [infrastructure law] awarded funding for 44,000 major infrastructure projects across the 50 states, including spending on electricity grid reliability and resilience,” the report continues, citing the White House.

Correction: A previous version of this story incorrectly referred to Japan as a continent, instead of the country that it is. The article has been fixed.

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