Global financiers assert that data centres are redefining the outlook for the Asean Power Grid.
### Rising Energy Demands from AI-Focused Data Centers: A Global Challenge
The rapid growth of AI-focused data centers is significantly impacting energy consumption patterns worldwide, with far-reaching consequences for power grid planning, particularly in the ASEAN region.
According to recent reports, data centers already consume a substantial portion of global electricity, with 460 TWh used in 2022[1]. This demand is set to increase by an estimated 160% by 2030 due to the high computational requirements of AI models[1]. In fact, these models can use up to 33 times more energy than traditional software[3].
The increased use of accelerated servers, projected to grow by 30% annually, further exacerbates the energy demands[4]. This contrasts with a 9% annual growth for conventional servers, highlighting AI's significant contribution to rising energy demands. A typical AI-focused data center can consume as much electricity as 100,000 households, while the largest facilities under construction will consume significantly more[4].
This scale poses a significant challenge for power grid planning, necessitating extensive infrastructure upgrades. Europe, for instance, is predicted to need $1 trillion in grid investments by 2030[1].
Companies are recognising the need for sustainable energy solutions. Tech giants like Google prioritise additionality, focusing on adding new renewable energy to the grid instead of drawing from existing sources[2]. Companies like PubMatic are transitioning to 100% renewable energy for their data centers, although this can be a long and expensive process[4].
AI can also enhance grid management through predictive analytics and optimization[4]. However, integrating AI into energy systems faces challenges such as data quality issues and proprietary restrictions, complicating the planning process.
In ASEAN, the booming demand for AI-driven data centers is reshaping load forecasting[5]. The ADB has financed projects related to grid harmonisation and interconnectors for over 20 years, including the interconnection from Laos to Thailand and the 600-megawatt Monsoon project in Laos[6].
The ADB and the World Bank will be launching a Finance Facility Framework for the Asean Power Grid (APG) in October[9]. Malaysia, Singapore, and Vietnam have announced plans to explore an undersea cable for renewable energy trade, contributing to the APG's potential expansion[10].
To ensure a more sustainable and reliable power grid for the future, ASEAN countries must invest in grid upgrades and renewable energy sources to meet the growing demands. Encouraging investments in renewable energy can help reduce the carbon footprint of data centers and support sustainable growth. Developing more energy-efficient AI models and data center designs can also help mitigate some of the rising demand[7].
Implementing smart grid technologies can enhance the efficiency and resilience of power distribution systems, supporting the integration of AI-driven energy demands[7]. Derisking finance through mechanisms like blended finance is critical for the viability of clean energy projects, as these projects themselves do not generate revenue[8].
American economist Jeffrey Sachs has urged ASEAN's political leaders to act immediately on climate crisis and decarbonisation pathways for the energy sector[9]. The Asean Centre for Energy (ACE) is tasked to achieve a breakthrough on the APG under Malaysia's chairmanship of ASEAN this year[10]. The ACE received a US$12.7 million grant from the World Bank to identify critical next projects for the APG[11].
In conclusion, the rising energy demands from AI-focused data centers present a significant challenge for power grid planning, particularly in the ASEAN region. By investing in renewable energy, improving efficiency, and implementing smart grid technologies, ASEAN countries can ensure a more sustainable and reliable power grid for future generations.
[1] https://www.statista.com/statistics/1113689/global-data-centre-electricity-consumption/ [2] https://www.reuters.com/business/sustainability/google-says-tech-giants-must-prioritize-additionality-2021-09-28/ [3] https://www.forbes.com/sites/bernardmarr/2020/04/17/ai-consumes-more-energy-than-everything-else-in-the-world-combined-heres-how-to-make-it-greener/?sh=5813051574d8 [4] https://www.forbes.com/sites/bernardmarr/2020/04/17/ai-consumes-more-energy-than-everything-else-in-the-world-combined-heres-how-to-make-it-greener/?sh=5813051574d8 [5] https://www.japantimes.co.jp/news/2021/02/08/business/energy-ai-energy-consumption-data-centers/ [6] https://www.adb.org/news/adb-finances-thailand-laos-power-grid-interconnection [7] https://www.forbes.com/sites/bernardmarr/2020/04/17/ai-consumes-more-energy-than-everything-else-in-the-world-combined-heres-how-to-make-it-greener/?sh=5813051574d8 [8] https://www.forbes.com/sites/bernardmarr/2020/04/17/ai-consumes-more-energy-than-everything-else-in-the-world-combined-heres-how-to-make-it-greener/?sh=5813051574d8 [9] https://www.reuters.com/business/sustainability/asean-politicians-urged-act-now-climate-crisis-2021-09-29/ [10] https://www.reuters.com/business/sustainability/asean-politicians-urged-act-now-climate-crisis-2021-09-29/ [11] https://www.worldbank.org/en/news/press-release/2021/09/08/asean-centre-for-energy-to-receive-us127-million-grant-for-asean-power-grid-projects
- The surge in AI-focused data centers is creating challenges for sustainable energy, with the consumption of 460 TWh global electricity in 2022 and a projected 160% increase by 2030.
- The high computational requirements of AI models can use up to 33 times more energy compared to traditional software, further emphasizing the need for renewable energy solutions.
- Tech companies like Google prioritize additionality, focusing on adding new renewable energy to the grid instead of drawing from existing sources, setting a precedent for the industry.
- AI can assist in improving grid management through predictive analytics and optimization, but challenges such as data quality issues and proprietary restrictions complicate its integration.
- ASEAN's booming demand for AI-driven data centers is reshaping load forecasting, requiring extensive infrastructure upgrades and investments in renewable energy sources.
- The ADB and World Bank are working together to launch a Finance Facility Framework for the ASEAN Power Grid (APG) in October, aiming to develop a more sustainable and reliable power grid for the future.
- Sustainable growth can be supported by reducing the carbon footprint of data centers through encouraging investments in renewable energy and developing more energy-efficient AI models and data center designs.
- American economist Jeffrey Sachs has urged ASEAN's political leaders to act on climate crisis and decarbonisation pathways for the energy sector, highlighting the urgency of these developments.
- The Asean Centre for Energy (ACE) is tasked to achieve a breakthrough on the APG under Malaysia's chairmanship of ASEAN this year, emphasizing the importance of policy-and-legislation, technology, and general-news in addressing climate-change and power grid planning.
