Demand for AI and Electric-Differentiated Renewable Energy Surges

In 2007, just before the Lehman crisis, global electricity demand reached about 20,000 TWh. Since it recorded about 29,500 TWh in 2023, it has grown by about 2% annually.

The IEA recently predicted an annual average increase in electricity demand by 2026 at 3.4%. It said that the significantly higher demand than in the past is due to the electricity demand for the heat pump for the data center electric vehicle, a new industry.

Power demand for data centers stagnated at about 200 TWh per year until 2019. However, due to the increase in the establishment of data centers due to the spread of AI and devices that require significantly higher power demand per unit, demand is estimated to have increased significantly from 2020 to 481 TWh in 2023.

Electricity demand is expected to reach 1,229 TWh with an annual average increase of 14% by 2030. Electric vehicles have a much higher rate of increase in power demand. It is expected to grow 30% annually from 129 TWh in 2023 to 827 TWh in 2030.

Over the past 20 years, the renewable energy industry has grown remarkably. This was due to policy support for global carbon reduction. As a result, it has grown by replacing fossil fuel power generation such as coal.

However, in the future, increasing demand for new industries such as data centers, electric vehicle heat pumps, etc. is emerging as another growth engine.

This is because data center consumers are big technologies based on RE100, and electricity demand for electric vehicles must be covered by renewable energy to reduce carbon.

Electricity demand for data centers and electric vehicles is estimated to increase from 610 TWh to 2,056 TWh in 2030.

Approximately 660 GW needs to be added to cover the increase in power demand of 1,446 TW over seven years with renewable energy.

Renewable energy has already taken over the global power generation market due to policy support and falling power generation costs. 80-90% of new power generation sources are filled with renewable energy.

Key Takeaways:

• Global electricity demand is on the rise: Growing at an average of 2% annually since 2007, it is projected to increase by 3.4% per year until 2026.
• New industries are driving demand: Data centers, electric vehicles, and heat pumps are significantly increasing electricity demand, especially data centers with a projected 14% annual growth until 2030.
• Electric vehicles are fueling rapid growth: Annual growth of 30% in power demand for electric vehicles is expected from 2023 to 2030, reaching 827 TWh by 2030.
• Renewable energy is crucial: Demand for renewable energy is increasing as data centers and electric vehicle consumers prioritize carbon reduction.
• Massive renewable energy expansion needed: To meet the projected increase in demand, an estimated 660 GW of renewable energy capacity needs to be added by 2030.
• Renewable energy is becoming the dominant source: Policy support and decreasing costs have made renewable energy the leading choice for new power generation, comprising 80-90% of new sources.