Powering the Digital Economy: Turning Data Center Growth into Energy Transition Opportunity

The pace of data center development and its associated energy consumption have emerged as a major driver for power system investments, unprecedented over the last 15 years in terms of concentration, scale and speed. It poses new challenges for power systems and at the same time creates new opportunities for investments in more efficient and cleaner energy infrastructure.

The digital economy today accounts for over 15% of global GDP (US$11–16 trillion). Its rapid growth is fueled by a surge in the use of emerging technologies, such as artificial intelligence (AI), 5G, the Internet of Things (IoT), and cloud services, which drives the demand for data processing, storage, and real-time connectivity.

However, while data center markets present a substantial opportunity for economic growth, they also pose a critical energy-climate dilemma. Data centers require extensive computing power, thus consuming large amounts of energy to function reliably. According to the International Energy Agency (IEA), data centers took up approximately 1.5% of electricity consumption globally in 2024. This consumption is expected to shoot up to around 945 TWh by 2030 from 415 terawatt-hours (TWh). Given this global data center growth, and the slow progress of grid decarbonization, the imbalance can potentially lead to emissions 7.6 times higher than initial estimations.

This session focuses on the emergence and rapid growth of data centers, and the new challenges and opportunities it creates for investments in more efficient and cleaner energy infrastructure. It discussed data center demand as the key driver of infrastructure investment and how this demand urgently raises the question of what future power system countries want to plan and invest in. It also examined how decisions by government, utility and regulators impact on whether data centers become a catalyst for grid modernization or a systemic risk.

The session likewise covered how projects — both digital and energy infrastructure — get financed, built, and powered, what bottlenecks exist, and how negative impacts on public and utility finances and climate ambitions can be avoided. Finally, the session identified practical, cross-sector actions that DMCs and ADB can take to align energy systems, digital infrastructure planning, and private sector engagement in support of sustainable data center development.