Elon Musk Warns AI Data Centres Could Strain Power Supply by 2026
Elon Musk’s AI startup, xAI, is building a massive gigawatt-scale data centre near Memphis, Tennessee, which is expected to be completed within six to nine months. A gigawatt roughly equals the output of a U.S. nuclear power plant, according to CNBC News. Musk highlighted three significant challenges in scaling AI: chips, transformers, and power generation. “As we solve the transformer shortage, there will be a fundamental electricity generation shortage,” he told AI data centres.
IEA Report Confirms Surge in Energy Demand
Musk’s concerns align with the International Energy Agency’s (IEA) recent landmark report Energy and AI, which forecasts that global electricity consumption by data centres will more than double by 2030, reaching about 945 terawatt-hours (TWh) — approximately Japan’s entire current electricity use. AI-optimized data centres are expected to quadruple their power demand within the same period.
In the U.S., data centres are projected to account for nearly half of the country's electricity demand growth through 2030. The IEA report notes that AI-driven power use for data processing will surpass electricity consumption in all energy-intensive industries, including steel, cement, and chemicals.
Also Read: Nvidia CEO Urges Japan to Boost Power Infrastructure for AI Growth
Energy Security and Environmental Concerns Rise
To meet this demand, renewables and natural gas are expected to lead the energy mix due to cost and availability. However, Musk criticized the U.S. for lagging behind China in expanding power generation, calling China’s energy growth “a rocket going to orbit,” compared to a “flat” U.S. outlook. xAI’s Memphis data centre, dubbed “Colossus, ” plans to use natural gas turbines, sparking environmental concerns over air pollution and non-supervisory compliance. Also, the IEA warns of energy security pitfalls, noting that cyberattacks on serviceability have tripled in the last four years, incompletely driven by AI’s complication.
IEA Executive Director Fatih Birol stated, “It is up to us — governments, companies, and societies — to harness AI responsibly to benefit both energy and climate goals.”
Despite rising electricity use and emigrations, the IEA report emphasizes that AI could ameliorate energy efficiency and accelerate inventions in batteries and solar technology.
