Rising Energy Demand Driven by Air Conditioning and AI Fuels Nuclear Power Revival

The global demand for electricity has seen a significant increase, primarily driven by the growing use of air conditioning, electric vehicles, and data centers. This surge in energy consumption is being met through a combination of renewable sources and a resurgence in nuclear power, as reported by the International Energy Agency (IEA) in Paris.

In the past year, electricity demand rose by 4.3%, nearly double the average growth rate observed over the last decade. A major contributor to this heightened demand is the widespread use of air conditioning, particularly in regions experiencing extreme heat, such as India and China. The demand for cooling systems has surged, especially in developing countries, which accounted for over 80% of the total increase in energy consumption.

Furthermore, the rise of artificial intelligence technologies and electric transport has also significantly contributed to this spike in electricity usage. The IEA highlights that the energy requirements for data centers and AI applications are growing rapidly, further straining the global energy supply.

In response to this growing demand, nuclear energy has experienced a notable revival. Six new reactors were completed globally last year, two of which were in China, resulting in a 33% increase in newly installed nuclear capacity compared to the previous year. Notably, several G7 nations, including the United States, the United Kingdom, and France, have expanded their nuclear capacities, while Germany has phased out its nuclear energy program.

Coal and oil demand continues to rise, albeit at a slower pace. The IEA reports a modest 1.1% growth in coal consumption, primarily driven by the need for electricity generation amidst ongoing heatwaves in Asia. Meanwhile, the growth in oil demand has also decelerated, attributed to the increasing adoption of electric vehicles. In China, a previous driver of oil demand, consumption of oil-based fuels saw a decline.

Renewable energy sources and natural gas have set new records in terms of growth. Over one-third of the increased energy supply came from renewables, with solar energy leading the charge, followed by wind and hydroelectric power. China remains at the forefront of this expansion, having installed the majority of new renewable energy capacity in the past year. The European Union and the United States also reported substantial growth in renewable energy installations.

Fatih Birol, Executive Director of the IEA, noted that the robust growth in solar, wind, nuclear energy, and electric vehicles is beginning to decouple economic growth from greenhouse gas emissions. Demand for natural gas has also surged, setting records, as it is increasingly utilized for electricity generation instead of oil. Additionally, the recovery in industrial demand, particularly within the European Union, has contributed to this increase. The demand for liquefied natural gas (LNG), which is also sought after in Germany, is expected to continue on an upward trajectory.