Renewables and storage could meet 80% of data centre power demand
Written by Nicole Cappella Thu 30 Jan 2025
A new report from Goldman Sachs has concluded combining renewable energy and battery storage could meet 80% of data centre power demand, even in the face of rapid demand growth driven by artificial intelligence (AI) adoption.
Analysts cautioned, however, that this solution must be paired with a form of baseload generation, possibly nuclear, to meet the need for 24/7 operations.
The growing complexity of AI models and the increasing volume of data required for training and operating AI applications are driving an unprecedented rise in data centre energy consumption. Goldman Sachs anticipates a 160% increase in power demand from data centres by 2030 compared to 2023 levels.
While improvements in efficiency have historically helped to counterbalance infrastructure power consumption, this trend has significantly slowed since 2020.
Efficiency Gains Not Offsetting Rising Power Demand
Research analyst at Goldman Sachs, Carly Davenport, noted the AI-driven increases in demand combined with the slowing efficiency improvements are creating a ‘power surge’ in demand for data centres. This is further complicated by the need to reduce the data centre industry’s carbon footprint, while at the same time ensuring a reliable energy supply.
Renewables, like wind and solar, have the potential to meet most data centre energy requirements at certain times of day but are not reliable enough to be the sole power source.
“Our conversations with renewable developers indicate that wind and solar could serve roughly 80% of a data centre’s power demand if paired with storage, but some sort of baseload generation is needed to meet 24/7 demand,” said Jim Schneider, Digital Infrastructure Analyst at Goldman Sachs.
Nuclear Expansion Faces Supply Challenges
Nuclear energy is recognised as a low-carbon, dependable source for powering data centres continuously. It produces very minimal greenhouse gas emissions compared to fossil fuels and thus presents a way of reducing the impact on the environment caused by increased electricity demand. The report, however, stated nuclear energy cannot solely be sufficient for the estimated power demand.
Goldman Sachs predicted an additional 85–90 gigawatts (GW) of new nuclear capacity will be necessary worldwide to satisfy the surge in data centre demand by 2030. Yet, current estimates indicate less than 10% of this capacity will be operational by that time.
Challenges like a shortage of specialised labour, intricate regulatory obstacles, and limitations in uranium supply have hindered the expansion of nuclear energy.
Written by Nicole Cappella Thu 30 Jan 2025