Energy and AI: enabling the electrification of the energy system
May 12, 2025
The electrification of the energy system is unstoppable. Whereas today’s share of electricity in global energy demand is 20 to 25%, it is expected that by 2050, 55% to 65% of global energy demand would be electrified, with a further 6% to 15% indirectly electrified using green hydrogen.
The current most significant drivers of electrification are electrical vehicles (expected growth in EU from 38 TWh in 2026 to 126 TWh in 2030), green hydrogen used for industrial processes such as refineries and fertilisers (expected growth in EU from 5 TWh in 2026 to 220 TWh in 2030) and industrial heat via heat pumps and thermal storage (expected growth in EU from 4 TWh in 2026 to 40 TWh in 2030).
The current digitalisation of the economy and the consequent construction of data centres to support the exponential growth of AI applications, is creating a new vector of rapid vector of growth in electricity demand: electricity demand for data centres is expected to account for 40 TWh in 2026 and double to 2030, only in the European Union, as reported in the Iberdrola Technology Vision 2030.
Global electricity demand due to data centres is expected to be around 945 TWh by 2030 equivalent to the electricity consumption of Japan today. Therefore, the potential of AI as a transformative agent of our way of life depends on energy: an AI-focused data centre can consume the equivalent of 100,000 households and the largest ones under construction may consume 20 times as much, noted in the Energy and AI, special report of the International Energy Agency, April 2025.
Energy for AI
AI impacts energy in multiple ways. First, AI is one relevant driver of electricity growth. According to the International Energy Agency (IEA), data centres accounted in 2024 for ~1.5% of global electricity consumption and it is expected that they will account for ~10% of the growth in electricity usage in the period 2025 to 2030.
This growth can vary significantly depending on the country. In advanced economies, data centres can account for more than 20% of the increase in electricity demand.
Another critical aspect of data centre demand is its high concentration in specific locations, which can create additional constraints on the energy system and the electrical grid.
A diverse mix of generation resources is essential to ensure sufficient energy supply to meet the rising demand from data centres, and renewable energy is expected to play a leading role. According to the IEA, “renewables generation is projected to grow by over 450 TWh to meet data centre demand by 2035, building on short lead times and economic competitiveness.”
In parallel, continued investment in electrical networks is key to ensuring that electricity demand is not restricted by the geographical concentration of data centres. Given the long lead times required for large-scale energy infrastructure projects, it is critical to plan for the long term and provide stable regulatory frameworks to avoid delays in the deployment of AI infrastructure.
AI for energy
AI, while reliant on energy, can also serve as a catalyst in the transformation of the energy system toward electrification. It contributes to this shift by using data-driven techniques to improve the productivity of energy assets through optimized operation and maintenance. It also supports the continuous balance between generation and demand in systems with increasing shares of non-dispatchable renewable energy.
Furthermore, AI is changing the way we plan and operate electrical networks, enabling better allocation of financial resources. It enhances system flexibility by optimising the use of energy storage and unlocking flexibility embedded in customer demand. In addition, AI facilitates the electrification of key demand sectors such as electric vehicles, building heating and cooling, and industrial processes. This empowers both consumers and energy operators to manage energy assets more effectively, generating cost savings, reducing emissions, and supporting the overall functioning of the energy system.
AI also helps connect the dots across sustainability efforts, bridging the relationship between electrification, energy, and broader challenges such as water conservation, food production, and biodiversity protection—contributing to what is often referred to as the energy-water-food nexus.
Conclusion
AI is transforming the way we live and work. It requires energy, but it also enables the sustainable evolution of the energy system towards electrification. Iberdrola is playing a leading role in this transformation, investing billions of dollars in electrical networks, renewable energy generation, energy storage, and customer solutions to electrify energy demand in vital sectors such as transportation, commercial and industrial heating.
Iberdrola also works closely with data centre operators to deliver end-to-end clean energy solutions to this critical infrastructure. At the same time, the company is leading the way in applying AI across the energy sector. Over the past decades, Iberdrola has been digitalising its generation and network assets, reshaping its operations, and developing in-house AI solutions to address key use cases at scale.
Energy Connects includes information by a variety of sources, such as contributing experts, external journalists and comments from attendees of our events, which may contain personal opinion of others. All opinions expressed are solely the views of the author(s) and do not necessarily reflect the opinions of Energy Connects, dmg events, its parent company DMGT or any affiliates of the same.
