04 December 2024

PLUGGING IN AND MAXING OUT: how data centres could drain Europe’s power supplies and threaten climate action

Berlin, 27 November 2024 — As the International Energy Agency’s (IEA) Global Conference on Energy and AI approaches (December 4-5, Paris), Europe faces a critical energy challenge. The rapid increase in data centres, driven by AI technologies, is fueling unprecedented surges in power demand. These vast energy requirements are straining grids already under pressure and risk increasing emissions unless they are matched by additional renewable power supply that reduces overall fossil fuel use. The stakes are high: unmatched data centre growth threatens the stability of the continent’s energy transition. Will these critical issues be addressed by representatives from industry and government at the IEA next week?

THE AI-DRIVEN POWER BOTTLENECK

Artificial intelligence (AI) is experiencing a boom, and its insatiable energy appetite is creating an unprecedented strain on Europe’s power supplies and grids. Data centres, the backbone of AI technologies and cloud computing, demand vast and constant electricity supplies. This rising demand is pushing power infrastructure in parts of Europe to its limits, with potentially grave implications for the region’s decarbonisation plans.

The International Energy Agency (IEA) reports that global data centre electricity consumption could double to over 1,000 TWh by 2026—equivalent to Japan’s annual electricity use [1]. In the EU, data centre power demand is forecast to grow from 100 TWh in 2022 (almost 4% of total EU electricity demand) to 150 TWh by 2026 [2]. McKinsey projects that by 2030, data centres could account for up to 25% of new net electricity demand in Europe, with AI technologies like generative AI driving much of this increase [3].

TWO POSSIBLE FUTURES

How will the coming electricity demand from data centres be met? Two starkly different scenarios are possible:

Scenario 1: Fossil Fuel Reliance.
Rising power demand from new data centres is met by burning more fossil fuels —derailing tech companies’ own net-zero pledges and threatening the imperative for Europe to decarbonise its power sector by 2035.
Scenario 2: Additional Renewable Power.
New renewable energy capacity—additional to already existing and planned capacity—meets data centre demand sustainably and tech companies contribute to expanding the grid and stabilise it through storage and other forms of clean flexibility, essential to achieve a fully decarbonised power sector.

Scenario 1 cannot be considered an option. Europe is already reeling from extreme weather events exacerbated by climate change. Burning more fossil fuels to power data centres would not only worsen these impacts, but also undermine Europe’s global climate action. Already in the US, data centres are driving an expansion in gas capacity [4]. Europe must not go down this road.

Scenario 2 is the only option. However, getting there will be a challenge including proper planning of power grids and investments in storage. Data centre demand is rising so fast that it may require a significant portion of the new renewable capacity to meet it. If not properly managed, this risks leaving few renewable energy resources for other critical sectors. If new data centre demand captures most of new renewables capacity, it will cannibalise the existing, and still inadequate, renewable energy supply. This will fail to move us towards a fossil-free power system, because this does not replace fossil fuels but simply shifts them to other sectors.

A THREAT TO PROGRESS?

Europe has made significant progress in reducing reliance on fossil fuels to generate electricity. In 2023, wind energy surpassed gas to become the EU’s second-largest electricity source [5]. However, gas still accounts for 17% of the EU’s power generation, only 7 of 844 operational European gas plants are in possession of a climate science-based closure plan, and Europe is planning to add at least 80 GW of new gas capacity, a 32% increase on today [6].

If rising power demand from data centres is not met by additional renewables, it threatens to lead to a resurgence in gas power generation at a time when Europe needs to be planning to stop burning fossil gas for power by 2035 to stay under a 1.5C warming pathway [7].

Tech companies today have made lofty pledges around renewable energy and carbon neutrality. However, many of these claims relate to the purchasing of virtual renewable energy certificates that only exist on paper and do not change the real energy mix for companies. This means that today a company could claim to be ‘100% renewable’ while still relying on significant amounts of fossil fuels like gas to power their data centres. Companies must step up and take responsibility by prioritising the purchase of new and additional renewable energy for new data centres, and transitioning existing data centres away from fossil fuels.

DATA CENTRES ADDING TO GRIDLOCK

The IEA estimates that around 1,240 data centres were operating within Europe in 2022 [6]. Many are clustered in financial hubs like Frankfurt, London, Amsterdam, Paris and Dublin, where power and data transmission infrastructure are accessible. However, these hubs are already buckling under severe grid constraints. Amsterdam and Dublin have implemented moratoriums [8,9] on new data centre construction due to the strain on local networks.

While companies do sometimes procure renewable energy for data centres, for example through Power Purchase Agreements (PPAs) with renewable energy suppliers, there is evidence that this is not keeping pace with the rapid growth of data centres, risking more gas and more emissions. In Ireland, where data centres account for a staggering 21% of electricity usage, estimates are that just 16% of the power demand from new data centres since 2020 has been met with renewable power purchase agreements [10]; an indicator of the challenge of aligning renewable power supply with surging demand. In addition, data centres in Ireland are bypassing the grid and connecting directly to the gas network at an alarming rate: 11 data centres in the country are contracted to connect to the gas network, of which 7 are already connected, 4 are awaiting connection, and a further 22 are in the pipeline [11].

In October, Europe’s energy watchdog, ACER, issued a sharp critique of the continent’s grid operators, declaring them unprepared for the rapid influx of renewable energy [12]. The agency warned that without urgent updates to grid expansion plans, Europe’s infrastructure will fail to keep pace with the electrification of the economy. Power demand from data centres is both immediate and immense. The threat of a widening gap between their growth and the renewable energy capacity required to sustainably support them is stark.

BIG TECH’S ‘FAUX GREEN’ SOLUTIONS

As AI-driven data centres fuel Europe’s surging power demand, tech companies are largely relying on flawed strategies to deflect climate criticism. Chief among these are the purchase of unbundled renewable energy certificates and announcements or investments in unproven Small Modular Reactors (SMRs)—neither of which address the immediate, large-scale emissions caused by data centre expansion.

Renewable Illusion
Purchasing unbundled ‘renewable energy certificates’ (known as Guarantees of Origin in Europe) has become a go-to strategy for some tech giants. By annually purchasing certificates for renewable energy generated far away and at any time of the day or year, companies claim their operations are green. However, research by the NewClimate Institute reveals that this type of annual purchasing fails to drive additional renewable projects or prevent equivalent emissions from being released elsewhere [13], undermining its effectiveness and at worst amounting to an offsetting of emissions through cheap credits. Some tech companies are moving towards more credible strategies that aim to align renewable energy purchases to their real time power use, moving away from annual matching towards hourly and local matching, and the whole industry should follow suit.

The Nuclear Mirage
Small Modular Reactors (SMRs) are another favoured talking point of Big Tech, hailed as the clean energy solution of the future. Yet, SMRs remain an immature, unproven technology from an industry characterised by delays and soaring costs. Not a single SMR is planned to deliver energy to the grid in Europe in the near term. When it comes to responding to the climate and energy challenges posed by the AI boom, today, new nuclear power is simply off topic.

These approaches form a “faux green curtain,” concealing the tech sector’s growing climate threat. Instead of relying on these false solutions, which simply aim to buy more time for fossil fuels, tech companies must invest in additional renewable capacity and grid infrastructure to meet the urgent demands of the present. They have the resources to do this: tech giants have spent a combined $130-150 billion each year on capital expenditure – citing AI data centres as a primary driver of spending [14].

WHAT NEEDS TO HAPPEN

Additional Renewable Power and Fossil Phase Out:
1. New data centre companies must come with new and additional renewable capacity that is locally produced on the same grid. Their demand must not cannibalise existing and already planned clean energy supplies.
2. Existing data centres sourcing power from fossil fuels must transition to renewables. They also need to urgently shift from relying on annual renewable energy matching to purchasing locally generated renewable power that meets their energy use every hour of the day.
Transparency and accurate accounting:
Transparency is essential if we are to properly address the massive projected growth demand from data centres. Companies must report their real-time fossil fuel reliance, i.e. their location-based emissions. They must be transparent about their growth plans and projected power needs. Overall, far greater transparency on the carbon footprint and energy usage of AI is needed.

As we head into the IEA summit next week, these are the key questions that should be on the table: how will the massive incoming data centre demand be powered and how will this affect the energy transition? Will companies commit to transparency, and to phasing out fossil fuels and moving away from offsetting of renewable energy?

QUOTES

Jill McArdle, International Corporate Campaigner at Beyond Fossil Fuels, said:
“The rapid growth of data centres is creating the clear threat of dragging Europe back towards fossil fuels at the expense of the climate. Tech companies have immense resources, they must take full responsibility for their electricity use and ensure their operations genuinely support a sustainable future. To do that, data centres must come with additional, local, and time-specific renewable energy generation.”

Pierre Terras, Programme Lead for Corporate Campaign at Beyond Fossil Fuels, said: “If artificial intelligence means more CO2 emissions, the tech giants need to fix their supercomputers and redo the maths. The climate crisis is now and the science is clear we can’t afford more fossil fuels. The answer of the tech industry to the AI energy hunger can’t be greenwashing via offsetting and nuclear fairytales.”

Rosi Leonard, Campaigner at Friends of the Earth Ireland said: “Ireland should serve as a warning to the IEA and other European countries. In the regions of Ireland where Meta has purchased the entire electricity produced by local solar farms for its data centres, over 60% of households are dependent on fossil fuels. In order for Big Tech to claim to be sustainable, renewables generation must outpace the growth in data centre power demand. In Ireland, however, total wind generation has been outstripped by data centre growth. Instead of going green, data centres are increasing their gas consumption, with 7 already plugged in and 22 more in the gas connection pipeline. Ireland has allowed itself to become a data dumping ground. We need a moratorium in Ireland now before this problem gets any worse.”

END

IEA’S GLOBAL CONFERENCE ON ENERGY & AI

More information 👉https://www.iea-events.org/global-conference-energy-ai

CONTACTS FOR MEDIA ENQUIRIES

Jill and Pierre will be available for in-person interviews on 4 December at the IEA’s technical forum on Energy & AI at the IEA Headquarters, 9 Rue de la Federation, Paris 75015. They will also be available in Paris on 5 December.

Julia Pazos, Communications Officer, Beyond Fossil Fuels, [email protected], +1 310 994 9692

Jill McArdle, International Corporate Campaigner, Beyond Fossil Fuels, [email protected], +32 456 723 993

Pierre Terras, Programme Lead for Corporate Campaign, Beyond Fossil Fuels, [email protected], +33 646 90 21 04

NOTES

PLUGGING IN AND MAXING OUT: how data centres could drain Europe’s power supplies and threaten climate action

Read also