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Data Centers Driving Surge in Electricity Demand Following Cloud & AI Advancements

Data Centers Driving Surge in Electricity Demand Following Cloud & AI Advancements

Since generative AI went mainstream in 2023, industry professionals said that the new tools will cause a surge in electricity demand in the near future. This is because emergent technologies like cloud computing and now AI rely on sophisticated data centers that eat up a lot of power. Top electricity suppliers are starting to see an increase in data center investment across the US, with similar developments in the UK and the rest of Europe.

The Demand for Data Centers

Data centers are the backbone of every digital industry, housing powerful computing equipment and servers filled with terabytes of data. These climate-controlled rooms have become commonplace today, especially now that cloud and edge computing incentivize having servers everywhere. They’re also used to keep websites online, so they’re important for work but also entertainment like video-sharing or iGaming sites. Whenever you access a website, stream a video, or access a live stream online, there is a data center hosting all those activities on the backend. That means that a data center is responsible for doing the heavy lifting when users play online roulette for real cash via a live stream or summon other forms of entertainment to their screens. Using powerful data centers makes online content feasible since they take care of heavy-duty processing and send the results to our more affordable, less powerful computers.

Data centers uphold a lot more than the internet. While dedicated internet data centers are dotted across the world, there are also CDN data centers and cloud data centers that are managed by both public and private entities. Oftentimes, security-conscious governments and businesses will operate their own private data center, giving them full control over the data they work with.

AI Fuels Data Center Boom

Given all of their use cases, it’s no surprise that data centers are also critical for AI. Machine learning has been used by data centers for a while, enabling centers to self-regulate their own temperature and power efficiency. Generative AI comes with new challenges for data center operators.

In 2023, OpenAI shocked the world by unveiling its ChatGPT software. It was an impressive chatbot that could handle a wide variety of tasks, drawing from a large language model (LLM). That LLM hosts an expansive dataset that enables the AI to respond to prompts, without losing the context of what you’ve said, so it resembles a real conversation. Other forms of generative AI can generate art, video, and even synthetic voice generation. In those cases, the output is created from an equally vast collection of sample material.

As AI tools become popular, their host servers will be subjected to increased traffic. Then there’s the data, which needs to be stored somewhere. Those models get bigger over time, as more training data is added. The data burden directly correlates to how advanced the AI service is, save for instances of model collapse. So, as AI servers get more advanced and find larger audiences, the required data capacity for server rooms will explode. This is why we are seeing a booming industry of data center construction.

Across the US, the power use for data centers is expected to triple in just one year. Figures vary depending on the region and how they are tallied, but 2023 saw approximately 15 terawatt hours used by data centers. In 2024, that’s predicted to reach up to 50 terawatt hours with more growth to come in the following years. The power use of individual data centers is predicted to reach 50 gigawatts in 2030.

It isn’t just an American phenomenon, as Europe is following suit. The British data center economy will boom to £10 billion ($12 billion) in the same time. Google is also committing billions to support its AI-powered tools on the island. They aren’t the only tech giants fueling the data center boom, as it shows no signs of stopping anytime soon.

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