06:17 AM EDT, 10/21/2024 (MT Newswires) -- A wave of investments in data centers, driven by growing digitalization and artificial intelligence, is raising concerns about a surge in electricity demand, the International Energy Agency said in a Friday commentary.

Much of the spending is concentrated in the U.S., where annual investment in data center construction has doubled in the past two years alone. Other major economies, such as China and the European Union, are also seeing an increase in activity, the IEA said.

However, when considered in a broader context, continued economic growth, electric vehicles, air conditioners and the rising importance of electricity-intensive manufacturing are all bigger drivers of global electricity demand growth, according to the IEA.

Still, the growth of data centers could lead to considerable strain on local power networks, exacerbated by the huge mismatch between rapid data center construction times and the often sluggish pace of expanding and strengthening grids and generation capacity, the IEA noted.

Also, rising electricity consumption from data centers could make meeting climate targets more difficult, the agency said.

With the role of data centers in the electricity system set to increase, it is important that policymakers and regulators have the tools to understand this new driver of demand growth, the IEA said.