Electricity demand from data centers rose 17 percent in 2025, far outpacing the 3 percent growth in global electricity demand overall, according to the International Energy Agency's Key Questions on Energy and AI report. Demand from AI-focused data centers climbed even faster, and the agency projects total data center electricity consumption will double by 2030, with power use at AI-focused facilities set to triple.

Capital spending is scaling alongside demand. The IEA found that capital expenditure by five large technology companies surged past $400 billion in 2025, driven by data center investment, and is on track to rise another 75 percent in 2026.

The buildout is increasingly constrained by physical bottlenecks. Supply chains for gas turbines, transformers, advanced chips, and IT components have tightened over the past year, while the growing pipeline of projects is straining planning systems and delaying grid connections. In response, the technology sector accounted for roughly 40 percent of all corporate renewable power purchase agreements signed in 2025, and conditional offtake agreements between data center operators and small modular reactor projects grew from 25 gigawatts at the end of 2024 to 45 gigawatts.

Many developers, particularly in the United States, are turning to onsite natural gas generation to bypass slow grid connections, though IEA satellite tracking shows most of those projects remain in early stages. The agency notes that onsite battery storage is emerging as a critical technology for managing the rapid demand swings characteristic of AI data centers.

Source: International Energy Agency -- https://www.iea.org/news/data-centre-electricity-use-surged-in-2025-even-with-tightening-bottlenecks-driving-a-scramble-for-solutions