Global electricity demand to rise 4% annually through 2027: IEA
What's the story
The International Energy Agency (IEA) has predicted a whopping 4% annual rise in global electricity consumption by 2027.
The surge, the fastest in recent years, is mainly fueled by artificial intelligence (AI), industrial production growth, more air conditioning usage, and the spread of electric vehicles.
In 2024 alone, there was a massive 4.3% rise in worldwide electricity demand.
Energy consumption
Data centers and AI models are major energy consumers
The IEA expects an unprecedented 3,500TWh rise in global electricity demand in the next three years.
That's like adding a country's annual electricity needs (for example Japan) to the global grid every year.
Data centers powering AI models and cloud computing are becoming major energy consumers.
In China alone, their share of electricity demand is expected to double from 2025 to 2027, hitting 6%.
AI efficiency
DeepSeek's efficiency could impact global electricity demand
The emergence of DeepSeek, a Chinese AI start-up famed for its high efficiency, is bringing a new angle to these projections.
Even with export restrictions preventing access to advanced chips, the company has created high-performance AI models at a fraction of the cost usually paid by US tech giants.
This has upended energy market expectations and raised questions about whether such efficiency gains could even cut the huge electricity demand expected from AI-driven data centers.
Adoption impact
Efficiency gains could lead to increased AI adoption
While DeepSeek's models may require less power to operate, experts warn that efficiency gains could also lead to increased AI adoption.
This could potentially counter any reductions in energy use.
The uncertainty surrounding AI's electricity demand is already impacting financial markets.
Energy companies heavily reliant on AI demand have seen their share prices fall after analysts questioned whether the US power sector's aggressive growth projections still hold up.