Data centers are physical facilities that house computer systems and related infrastructure, such as servers and storage, used to store and process data. They form the foundation of a nation's computing power and are a core dependency in building large-scale Artificial Intelligence (AI). AI data centers, in particular, are particularly energy-intensive. According to the International Energy Agency (IEA), a typical AI data center currently uses as much energy as 100,000 households, while large AI centers currently consume about 20 times that amount (2 million households).
The computing power needed to support AI growth is also doubling approximately every 100 days. For example, Malaysia, it is not surprising that data center energy consumption in Malaysia is projected to soar to more than 5,000 MW by 2035, which is 40 percent of Peninsular Malaysia's current power capacity, or 11.1 percent of Malaysia's projected power capacity in 2035. Meanwhile, in Indonesia. Meanwhile, the projection of data center electricity consumption in Indonesia has increased significantly, predicted to reach 5,200 MW in 2034 and could even reach 12,000 MW in 2033. And the current capacity in 2025 is only around 274 MW and with a predicted growth of 16.8% per year, it can reach the target of >2,000 MW in 2029.
There are at least two main drivers of growth in the data center industry. First, demand-side factors include the growth of cloud computing and AI, along with the increasing global demand for data storage and processing capacity for everyday tasks like social networking, e-commerce, and data storage. Second, supply-side factors include the availability of resources such as electricity and water, fiber optic connectivity, and land availability.
In the growing data center industry, high or wasteful energy consumption has contributed to rising electricity prices for residents and small businesses. Each country should learn from these case studies as they strive to strike a balance between growth and sustainability. For example, in Georgia, the fastest-growing data center market in the country, Georgia Power reports that 80 percent of the projected 8,200 MW increase in energy demand by 2030 is related to planned data centers opening in the state. To address the increased demand, base electricity rates have been raised and new nuclear power plant (NPP) are under construction.
Georgia is an attractive market for data centers, given its relatively low electricity prices, with industrial electricity rates about 42 percent below the US national average. Significant tax relief was also promised, with at least $163 million in state collections eliminated and local sales tax annually starting in 2022. However, starting in 2023, the average Georgia Power residential customer will pay $43 more per month following a base rate increase. To address this challenge, a Senate bill was introduced to protect residential and commercial customers from higher electricity bills due to the utility's significant investment in AI-powered energy needs.
Efforts to address the increasing energy demand for data centers while reducing their environmental impact are necessary. Typical approaches include optimizing Power Use Effectiveness (PUE) and related metrics, as well as shifting to renewable energy. The use of renewable energy for data centers remains limited, or even at a small capacity of less than 5%. Renewable energy sources still prioritize solar and intermittent wind.
Industry participants also state that the intermittent nature of solar energy (at least without a well-developed battery storage system) does not make it an ideal energy source for data centers, given the need to keep data centers running 24/7. With limited solar generating capacity, data centers often rely on backup diesel generators. While renewable diesel (biodiesel and green diesel) is an available option, there are currently no regulations encouraging this transition.
Biomass as an energy source, or bioenergy, for data centers is still very limited. This biomass can be used directly in biomass power plants, where the CFB type is very common, or through co-firing in coal-fired power plants. Furthermore, biomass can be utilized as an energy source and biochar production through pyrolysis technology, as is the case with this US company. The syngas from pyrolysis serves as a carbon-neutral energy source, and biochar is the primary product for carbon capture and sequestration (CCS), resulting in carbon-negative operations.
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