The emergence of a global tariff war could pose obstacles for the growing data center industry and result in slower development, according to Laura Cozzi, the Director of Technology at the International Energy Agency (IEA), in an interview with Reuters.
By 2030, the United States, China, and the European Union are expected to contribute to 80% of the anticipated increase in data center demand, mainly driven by Artificial Intelligence (AI) applications, based on a report from the IEA released on Thursday.
Cozzi explained that the current environment of tariffs, with slower economic growth and increased tariffs across multiple countries, could potentially lead to a deceleration in AI growth compared to the IEA's base projection.
According to IEA data, under a "headwind scenario," global electricity usage from data centers might decrease from 945 terawatt hours (TWh) to 670 TWh by 2030, as opposed to the base case scenario.
The United States is projected to experience substantial electricity demand growth attributed to data centers by 2030, with the country expected to be a leading global hub for data center infrastructure development.
Data center development in the US has led to significant requests for new power capacity, surpassing existing capabilities, which has raised concerns about the impact on power utilities and the overall demand for electricity from tech companies seeking partnerships.
The report emphasizes the importance of aligning data center development with the capabilities of power utilities to ensure a reliable electricity supply for AI requirements.
Challenges such as grid strain could potentially cause delays in data center projects, with around 20% of planned projects at risk. The demand for transmission infrastructure and essential grid equipment is high, reflecting the potential risks outlined in the IEA report.
Approximately half of the data centers under construction in the US are located in existing large clusters, which may pose local infrastructure challenges, as noted in the report.