Why Tech Companies Are Worried About Power
In this blog series, we’re alternating between understanding the basics of India’s power sector and diving into emerging trends that are reshaping its future. Today, let’s take a detour into one of the most exciting (and slightly worrying) trends: why tech companies are sweating about electricity.
To set the stage, consider this mind-boggling stat. Imagine adding a Japan to the world—not in people, but in electricity demand. That’s what the International Energy Agency (IEA) says is coming our way in just two years, thanks to data centers:
“Data centres are significant drivers of growth in electricity demand in many regions. After globally consuming an estimated 460 terawatt-hours (TWh) in 2022, data centres’ total electricity consumption could reach more than 1,000 TWh in 2026. This demand is roughly equivalent to the electricity consumption of Japan. Updated regulations and technological improvements, including on efficiency, will be crucial to moderate the surge in energy consumption from data centres.” (IEA Report, 2024).
Data centers, AI computation, and crypto are already guzzling a significant chunk of electricity, and their appetite is only growing. With AI poised to dominate the next decade, the demand for electricity from these sectors is set to skyrocket. To put this into perspective, the U.S. currently houses about a third of the world’s 8,000 data centers, but countries like Ireland are catching up fast. In Ireland, 17% of the country’s electricity consumption is already driven by data centers, and that’s expected to double to a jaw-dropping 33% in just two years.
How Companies Are Coping
The good news? Companies are waking up to the challenge. Ethereum, for example, made headlines in 2023 when it switched from a proof-of-work to a proof-of-stake system, slashing its energy use by an eye-popping 99.99%. Then there’s Google, which is doing something equally fascinating. Partnering with Intersect Power and TPG Rise Climate, Google is co-locating industrial parks with clean energy sources, essentially building its own mini-grids to power data centers sustainably and bypassing traditional grid bottlenecks.
This trend—companies taking matters into their own hands—isn’t just limited to the U.S. It’s a global phenomenon. If governments can’t keep up with infrastructure demands, firms are more than willing to adapt, whether by moving closer to power sources or rethinking their energy strategies entirely. It’s the modern-day version of “going to the mountain if the mountain won’t come to you.”
What This Means for India
India isn’t far behind in this story. While we’ve largely cracked the puzzle of generating electricity, transmitting it reliably across the country is still a big challenge. Add the demands of tech-driven industries like AI and cloud computing, and our grid will be under more pressure than ever. The need for robust, high-capacity transmission networks has never been greater—and we’ll dive deeper into this in a later post.
The Bigger Picture
The intersection of AI, electricity, and business strategy is becoming a space to watch. Companies with insatiable energy needs aren’t just looking to improve efficiency; they’re rewriting the rulebook. Nuclear energy is back in the conversation too, one way or the other, with small modular reactors emerging as a promising solution for energy-intensive operations.
What’s Next?
If you’re a student of India’s power sector, here’s what you need to keep an eye on: the explosive growth of AI, the evolving role of cryptocurrencies, the efficiency of electricity grids, and how firms are innovating to meet their energy needs. These trends won’t just shape the power sector; they’ll define how our economy evolves in the years to come.
Exciting times are ahead in BijleeLand. As we’ll uncover in future posts, solving today’s power challenges will require innovation, bold action, and a healthy dose of optimism. Stick around—there’s plenty more to learn!