The increased consumption of Artificial Intelligence (AI) will significantly increase data centres’ capacity, energy consumption, and carbon emissions, the International Data Corporation (IDC) has said.
The report said, “The surging demand for AI workloads will lead to a significant increase in data centre capacity, energy consumption, and carbon emissions, with AI data centre capacity projected to have a compound annual growth rate (CAGR) of 40.5 percent through 2027.”
IDC expects global data centre electricity consumption to more than double between 2023 and 2028, with a five-year CAGR of 19.5 percent, reaching 857 Terawatt hours (TWh) in 2028.
Data centres are the heart of the digital economy, and as the world gets more digital, the demand for them is expected to rise. However, their cost of operations is also expected to rise.
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“The amount of power data centres require is immense,” stated Chris Wood, CEO of West Indian Ocean Cable Company.
The IDC noted that “electricity is by far the largest ongoing expense for data centre operators, accounting for 46 percent of total spending for enterprise data centres and 60 percent for service provider data centres.” It added that electricity consumption is growing rapidly as data centres take on more workloads, including energy-intensive workloads such as AI.
To give more context to data centres’ energy use, the IDC conducted scenario planning for a data centre with 1 MW of IT load in 2023, running at 50 percent capacity and power usage effectiveness (PUE) of 1.5. The study looked at three energy price growth scenarios using energy pricing and growth rates for the United States, Germany, and Japan.
In all three scenarios, the percentage growth in electricity costs exceeded a CAGR of 15 percent, with most scenarios showing growth of over 20 percent. The study also showed that an additional 10 percent in energy efficiency could offer considerable savings to data centre operators.
Sources believe electricity prices are rising due to supply and demand dynamics, environmental regulations, geopolitical events, and sensitivity to extreme weather events, which are fuelled in part by climate change.
IDC believes the trends that have caused electricity prices to increase over the last five years will likely continue.
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Sean Graham, Research Director, Cloud to Edge Datacenter Trends at IDC, said, “There are any number of options to increase data centre efficiency, ranging from technological solutions like improved chip efficiency and liquid cooling to rethinking data center design and power distribution methods.”
“But providing energy-efficient solutions is only part of the equation for meeting customer needs. Data center providers, including cloud and colocation services, should continue to prioritise investment in renewable energy sources. By investing in renewables, they are helping to increase overall supply while helping their customers meet their sustainability goals,” he added.
IDC noted that Solar and wind power offer significant environmental advantages while also providing the lowest levelised cost of electricity (LCOE), which reflects the average net present cost of electricity generation over a generator’s lifetime.
It suggested that “by collocating facilities at or near the source of renewable energy generation, providers can reduce both construction costs and energy losses associated with distribution, enhancing overall efficiency and sustainability while also improving resiliency by removing grid reliability issues.”
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