New report finds that some developers are constructing on-site gas-fired power as they await grid connections for AI data centres
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A new report by BloombergNEF (BNEF) found that some AI data centre developers, predominantly in the US, are building on-site gas-fired power as they await grid connections because of energy demand.
If all proposed on-site gas plants for US data centres were built and operated under BNEF’s assumptions, they would emit around 345 million metric tons of carbon dioxide equivalent each year.
Although these gas projects are intended only to supply power while data centres await grid connections, BNEF says developers could be encouraged to keep generating energy, creating a ‘longer-term fossil-fuel lock-in risk beyond the annual emissions’.
Many US data centres already rely on gas-powered electricity, including Elon Musk’s AI company xAI. The company has illegally operated at least 46 methane-powered generators, despite health risks to nearby residents from the release of toxic nitrogen oxides and formaldehyde.
The new report also looked at four emerging data centre markets across Brazil, India, Indonesia and Malaysia and how their electricity generation will fare in the coming years.
In Brazil, BNEF expects almost all incremental generation needed to meet data centre demand until 2035 to come from renewables. In India, existing coal plants will supply much of the additional electricity to meet data centre demand until 2035.
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However, the picture is slightly different in Indonesia, as current rules do not allow data centres to contract directly with independent renewable generators. As a result, they cannot access clean power. In Malaysia, additional demand is expected to increase use of existing coal and gas plants in the near term, while longer-term projections may see new gas capacity and extensions of coal plant life.
The report also found that data centre electricity demand is set to almost quadruple by 2035.
‘The extraordinary economics around AI are making speed to power one of the most important priorities for defining constraints on data centre developers. The climate outcome will depend not only on how much electricity these facilities use, but on how quickly grids can connect them and whether power systems add cleaner generation alongside that demand,’ said head of data centres and emerging technology at BloombergNEF Mark Daly.
According to the BBC, the world will spend around £ 2.2 trillion on data centres supporting AI between 2025 and 2029, a figure roughly equivalent to the size of the French economy.
The new BloombergNEF report follows analysis from the environmental charity Global Action Plan, which found the UK’s projected data centre growth could push tens of thousands more households into fuel poverty. By 2035, data centre growth could add up to £2.6billion to household electricity bills across the UK, the charity’s report revealed.
Earlier this year, Geographical reported that more than 100 new data centres in the UK planned to burn gas to generate electricity while they waited long periods to connect to the National Grid. Around 100 more data centres are planned for the UK, mostly in London and neighbouring counties, with completion expected around 2030.
