Middle East's energy advantage could fuel AI growth, World Economic Forum official says

There are a lot of options in this region for supplying the energy that is needed by the data centres, Roberto Bocca says

Data centres’ total electricity consumption could more than double to 1,000 terawatt-hours in 2026. Photo: Microsoft

The Middle East’s vast energy resources could help the region play a key role in the artificial intelligence (AI) revolution, as the technology relies on large data centres that demand substantial amounts of electricity, a World Economic Forum (WEF) official has said.

The region is “gifted with oil and sun” and a lot of countries are active in the nuclear energy space, particularly the UAE, Roberto Bocca, head, Centre for Energy and Materials, and member of the Executive Committee at WEF, told The National on the sidelines of the World Utilities Congress (WUC) in Abu Dhabi on Monday.

“There are a lot of options here for supplying the energy that is needed by the data centres … so, this will eventually be a question for those companies that have to decide where to set up those data centres,” he said.

The International Energy Agency has forecast that data centres’ total electricity consumption could more than double to 1,000 terawatt-hours in 2026, up from 460 terawatt-hours in 2022.

Global power demand is forecast to grow by about 4 per cent in 2024, marking the fastest annual growth rate since 2007, aside from the exceptional rebounds following the global financial crisis and the Covid-19 pandemic, the Paris based-agency said in a July report.

At the WUC, officials and executives noted that while renewable energy is becoming a larger part of electricity generation, it's vital to expand or upgrade electricity grids to ensure that people have access to power.

They also said that implementing stricter energy efficiency measures is important to reduce the strain on power systems, especially as demand for cooling increases.

The whole world is facing the challenge of growing demand for water and electricity “whether you are in the Middle East, Europe or the US”, UAE Minister of Energy and Infrastructure Suhail Al Mazrouei said.

“Ageing infrastructure needs replacement [and] efficiency is something we need to take care of,” Mr Al Mazrouei told attendees during a keynote speech.

Global transmission networks need to “catch up” to support the Cop28 commitment to triple renewable energy capacity by 2030, Jasim Thabet, the chief executive of Taqa said during a panel session.

Citing IEA estimates, Mr Thabet said that achieving national climate and energy goals will necessitate adding or replacing a staggering 80 million kilometres of power lines worldwide by 2040.

“We must rebuild power systems that took 100 years to build in a fifth of the time,” the utility head said.

“On the demand side, we see a big trend now with the significant increase in consumption from data centres and AI,” he added.

Taqa is aiming for 150 gigawatts of gross power generation by 2030, up from the current 50 gigawatts. Out of this new target, 65 per cent of the capacity will come from renewable energy sources.

“We're committing over $12 billion in supporting the grid and the energy transition, and also we're seeing … more synergies as the world comes closer together with opportunities and interconnectors,” Mr Thabet said.

On Monday, Taqa announced a new brand identity for its group of companies as part of its growth strategy.

The move includes the Abu Dhabi Distribution Company (Addc) and Al Ain Distribution Company (Aadc) merging under a new brand, Taqa Distribution, to serve customers in the emirate.

“We are doubling down on demand side management and we're seeing a shift in attitude when it comes to government entities. They've become very much aware and concerned about their carbon footprint, and they come to private sector companies like Taqa,” Mr Thabet said.

The scale of demand

Some officials warned of the immense scale of future AI power demand.

Over the past six years, the combined electricity demand of the new data centres installed by four American tech giants – Meta, Alphabet's Google, Microsoft and Amazon – is more than the electricity generated by Barakah, the Arab world’s first nuclear power plant, the head of the Emirates Nuclear Energy Corporation, the plant's operator, said during the same panel session.

The four units at Barakah produce about 40 terawatt-hours of electricity annually.

“We've been always unable to predict the demand for electrons … two years ago, nobody predicted AI and data centre demand will grow exponentially,” Mohamed Al Hammadi, managing director and chief executive of Emirates Nuclear Energy Corporation, said.

Hard to predict

There are various theories about how much energy AI will use in the future.

“People are telling me that for specific applications, AI is not that hugely consuming,” Mr Bocca said.

“If you take optimising the energy efficiency of a building, you just source all the data about the buildings, but not about everything else,” he added.

The WEF is conducting a comprehensive study on AI's impact across different sectors and industry, which could be released at Davos next year, Mr Bocca said.

“Long story short AI is a game changer, but we don't know in which way, and so I think that's why there is so much debate,” he said. “My suggestion is that [we] look at the data to understand the facts … and that will give us a better picture.”