If there’s any question about whether data centers are driving the global economy, a new report from the International Energy Agency should dispel any doubts. This year, the world will spend $580 billion on data centers, $40 billion more than it will spend on new oil supplies.
“This point of comparison provides a telling marker of the changing nature of modern, highly digitalized economies,” the agency said in the report.
Electricity consumption from AI data centers is expected to grow fivefold by the end of the decade, doubling the total used by all data centers today. Conventional data centers will also consume more energy, though the increase won’t be nearly as dramatic.
Fully half of that demand growth is expected to occur in the U.S., the IEA said, with the bulk of the remainder occurring in Europe and China.
Most new data centers are being developed by large cities with populations exceeding 1 million people, the agency said. One half of those in the pipeline are at least 200 megawatts, and most are being built near other data centers.
“This rapid build out of data centers — especially in clusters and around urban areas — comes with challenges,” the IEA wrote. “Grid congestion and connection queues are increasing in many regions, and connection queues for new data centers are often already long.”
In some markets like northern Virginia, grid connection waits can be as long as a decade. In Europe, Dublin has paused new interconnection requests entirely until 2028.
Techcrunch event Join the Disrupt 2026 Waitlist Add yourself to the Disrupt 2026 waitlist to be first in line when Early Bird tickets drop. Past Disrupts have brought Google Cloud, Netflix, Microsoft, Box, Phia, a16z, ElevenLabs, Wayve, Hugging Face, Elad Gil, and Vinod Khosla to the stages — part of 250+ industry leaders driving 200+ sessions built to fuel your growth and sharpen your edge. Plus, meet the hundreds of startups innovating across every sector. Join the Disrupt 2026 Waitlist Add yourself to the Disrupt 2026 waitlist to be first in line when Early Bird tickets drop. Past Disrupts have brought Google Cloud, Netflix, Microsoft, Box, Phia, a16z, ElevenLabs, Wayve, Hugging Face, Elad Gil, and Vinod Khosla to the stages — part of 250+ industry leaders driving 200+ sessions built to fuel your growth and sharpen your edge. Plus, meet the hundreds of startups innovating across every sector. San Francisco | WAITLIST NOW
The supply chain for the grid is another pinch point, with cables, critical minerals, gas turbines, and transformers delaying upgrades, the agency said.
Some companies, like Amperesand and Heron Power, are working on solid-state transformers, which promise to be a significant upgrade over the century-old technology that currently manages parts of the grid. They can integrate renewables more deftly, react swiftly to grid instabilities, and can handle a range of conversions. But first deployments are at least a year or two away, and it’ll take a while to ramp up production.
... continue reading