The rapid increase in data center energy consumption, driven in large part by the growing demand for generative AI applications, has underscored the urgent need for collaboration among various stakeholders within the data center industry. Data center operators, hyperscalers, electricity providers, regulators, municipalities, and real estate firms must join forces to achieve a balanced approach that addresses environmental, business, and societal goals. This collective effort necessitates a strategic assessment of colocation needs, which involves a data center company leasing computing and server resources to other companies, as well as a focus on cooling, recycling, and heat and wastewater management.
Rising Energy Consumption and Environmental Impact
As data centers are projected to account for about 2% of global electricity consumption (536 TWh) by 2025, this figure is expected to nearly double to 1,065 TWh by 2030. In the United States alone, data centers are forecasted to represent 6% of electricity consumption (about 260 TWh) by 2026. This surge in energy demand is largely attributed to the rising use of generative AI applications, which require significant computing power. To mitigate their environmental footprint, companies are actively exploring energy-efficient technologies and carbon-free energy sources.
Despite these efforts, the rapid growth in data center energy consumption poses a significant challenge to achieving clean energy targets. The need for round-the-clock, carbon-free energy further complicates the situation, as it requires substantial investment in renewable energy infrastructure and technologies. The urgency of meeting these clean energy targets is amplified by the geographical concentration of data center demand and the increasing push for electrification in manufacturing and other sectors, highlighting the need for collaborative, innovative solutions.
Transformations in the Power Industry
The power industry is undergoing significant transformations, including constructing, upgrading, and decarbonizing electric grid infrastructures. Digitalizing systems and assets is also a key area of focus, as utilities work to reinforce their infrastructures to combat severe weather and cyber threats. These changes are essential to support the growing energy demands of data centers and other sectors. One of the significant challenges faced by the industry is the price disparity between new data centers and legacy facilities. Existing data centers often lack the necessary infrastructure to handle the intensive workloads demanded by advanced computing applications.
Liquid cooling technology, which could potentially support more data-intensive server racks and eliminate the need for chillers, is still in its infancy and not yet widely integrated into AI data centers. The development and adoption of such technologies could be a game-changer in mitigating the environmental impact of data centers. As the power industry continues to evolve, the balance between technological advancements and the reinforcement of existing infrastructures will be pivotal in meeting the energy needs of the future.
Strategic Partnerships and Renewable Energy Procurement
Major industry players like Amazon and Google are making aggressive moves to increase their use of renewable energy and establish power purchase agreements. This proactive stance has led the technology sector to dominate U.S. corporate renewable procurement, responsible for over 68% of nearly 200 deals tracked from February 2023 to February 2024. However, achieving 24/7 carbon-free electricity remains challenging, especially in the short term. Many electricity providers continue to plan for the construction of carbon-emitting natural gas-fired power plants, which could hinder efforts to meet decarbonization targets set by utilities, states, and national guidelines.
Deloitte advocates for the formation of strategic partnerships to address local and cluster-level AI data center needs. Close collaboration between the technology sector and electricity providers is essential to secure funding and scale new energy technologies, a critical step toward integrating more clean energy into the grid. By leveraging the strengths and capabilities of various stakeholders, these partnerships can drive the development and implementation of innovative solutions to reduce the environmental impact of data centers.
Optimizing Generative AI and Edge Processing
Deloitte recommends optimizing the use of generative AI and shifting some processing workloads to edge devices. This approach can conserve network and server bandwidth and support applications requiring swift response times or involving sensitive data. By distributing processing tasks closer to the data source, companies can reduce the energy consumption and environmental impact of their data centers. The integration of cutting-edge cooling technologies and renewable energy will be pivotal in meeting clean energy targets.
This approach not only addresses the immediate needs of energy-intensive AI applications but also sets a foundation for sustainable growth and resilience in an era of escalating digital and environmental demands. Furthermore, optimizing the deployment of generative AI and edge processing can enhance operational efficiency and contribute to a more sustainable data center infrastructure.
The Role of Stakeholders in Achieving Clean Energy Targets
The rapid rise in energy consumption by data centers, largely fueled by the increased need for generative AI applications, has highlighted the pressing requirement for collaboration among key stakeholders in the data center industry. Data center operators, hyperscalers, power suppliers, regulators, local governments, and real estate companies must work together to find a balanced approach that meets environmental, business, and societal objectives. This joint effort calls for a strategic evaluation of colocation requirements, meaning a data center company rents out their computing and server assets to other businesses. Additionally, attention must be paid to cooling, recycling, and managing heat and wastewater to achieve sustainability goals. Creating a synergy within these areas can help ensure a more efficient, green, and sustainable future for data centers, ultimately benefiting all stakeholders involved and addressing the increasing environmental concerns associated with the expanding digital infrastructure. This integrated approach is crucial for mitigating the environmental impact while supporting technological advancements.
