Global data centre energy consumption to exceed 2000 TWh in 2035

The expected increase in CO2 emissions from powering these new data centers creates a dual challenge for both governments with net-zero targets and tech giants with internal carbon neutrality pledges alike: how can the unprecedented rise of AI be supported without causing major harm to the environment?

The new report published by IDTechEx, “Sustainability for Data Centers 2025-2035: Green Technologies, Market Forecasts, and Players”, characterizes green data center technologies, players, and markets, focusing on cost and commercial viability. With coverage across solutions for reducing scope 2 emissions (renewable power generation and energy efficiency on the data center componentry level) and scope 3 emissions (carbon credits, green concrete, and decarbonized IT manufacturing), spanning over 170 companies, it provides comprehensive market intelligence for the data center space. Market forecasts until 2035 are included, covering global data center CO2 emissions, power and electricity consumption, and savings from carbon free energy usage.

Decarbonized power generation

Rapid growth in the data center construction is starting to stretch grid capacity to its limits in some regions. To expand in a way aligned with sustainability goals, data center hyperscalers are increasingly playing a more active role in bringing new renewable energy projects online beyond standard power purchasing agreements (PPAs) and renewable energy certificates (RECs). For example, early microgrid projects exploring on-site off-grid power generation for data centers are emerging.

Wind and solar power have long been favored by data center players due to a low LCOE (levelized cost of electricity) that is often below fossil fuel alternatives. However, the intermittency of these renewables means fossil fuel power generation is still needed for many hours per day. There is building momentum to change the way scope 2 power emissions are accounted for under the GHG Protocol to favor hourly time-based energy matching so that demand side signals can be sent for emerging low-carbon energy technologies to better facilitate the continuous power demand of data centers.

The new IDTechEx report, “Sustainability for Data Centers 2025-2035: Green Technologies, Market Forecasts, and Players”, examines such technologies, including hydrogen fuel cells, enhanced geothermal energy, small modular nuclear reactors, and grid-scale Li-ion batteries. Key players and case studies in the data center space are identified, and the economic/technical factors that determine which emerging energy solutions hold the most promise for green data centers over the next ten years are discussed.

Improving energy efficiency

Existing policies surrounding data center decarbonization, such as the EU Energy Efficiency Directive, relate to the energy efficiency (PUE – power use efficiency) of data centers. If less power can be consumed per data center through improved thermal efficiency, electrical efficiency, and IT efficiency, the environmental impact is minimized. Therefore, from purpose-built chips, memory modules, to cooling components and AC/DC converters, data center players are racing to enhance energy efficiency.

As the data center sector transfers over from traditional air cooling to direct-to-chip liquid cooling, bringing reductions in greenhouse gas emissions, water usage, and energy consumption, tradeoffs in other metrics, such as cost and complexity, must be considered. Further, with the constant emphasis on energy efficiency from leading component suppliers such as Nvidia, AMD, SK Hynix, and Infineon, the energy efficiency on the componentry level (e.g., GPUs, CPUs, memory modules, power converters, etc.) is also seeing growth.

Reducing Scope 3 emissions

Typically, scope 3 emissions represent the majority of CO2 emissions from data centers. Key factors contributing to scope 3 emissions include upstream manufacturing/assembly of servers and networking equipment used in data centers and emissions related to data center construction. In 2023, Microsoft’s Scope 3 emissions were 30.9% higher than in 2020, which was attributed to the embodied carbon in building materials, as well as hardware components such as semiconductors, servers, and racks.

Because Scope 3 emissions are indirect emissions in a company’s value chain that are not caused by the company itself, it can be hard for data center players to tackle scope 3 emissions. IDTechEx explores three different ways for companies to reduce scope 3 emissions in its new Sustainability for Data Centers report: (1) Purchasing carbon credits (specifically carbon removal credits) to counteract hard-to-avoid CO2 emissions, (2) Using low-carbon materials in data center construction (green concrete, green steel, and timber) either physically or through attribute purchases (book and claim), and (3) Choosing IT hardware with lower embodied/manufacturing carbon over the lifetime of a data center.