Power supply shortages are a ticking time bomb for data center operators

Two-fifths (40%) of data centers could face constraints in power availability by 2027 as AI demand continues to ramp up, according to research from Gartner.

Forecasts for electricity consumption growth in the data center industry are as high as 160%, Gartner said, creating a landscape in which four out of every ten will face power challenges in three years' time.

Gartner estimates the power required to run AI-optimized servers in 2027 will reach 500 terawatt hours (TWh), 2.6 times the figure of 195 TWh in 2023.

By 2025, the figure will be 335 TWh, and by 2026, 401 TWh.

Hyperscale growth on the back of generative AI is the culprit, Gartner analyst Bob Johnson said, as power demand is exceeding the available capacity of utility providers and power grids.

“In turn, this threatens to disrupt energy availability and lead to shortages, which will limit the growth of new data centers for GenAI and other uses from 2026,” Johnson said.

Short-term power outages will continue for years despite plans for larger data centers, Johnson added. New transmission, distribution, and generation capacity could take years to come online and also won't alleviate current problems, he said.

Similarly, power shortages will ramp up the price of energy, in turn increasing the cost of operating AI and large language models (LLMs). Gartner estimates that these costs will be passed on to AI and generative AI product and service providers.

Sustainability goals will also take a hit, as short-term solutions are deployed to provide more power whether or not they're climate-friendly. For example, Gartner said fossil fuel plants scheduled for retirement may be kept operational.

“The reality is that increased data center use will lead to increased CO2 emissions to generate the needed power in the short-term,” Johnson said.

How can businesses prepare?

In the first instance, Gartner recommended organizations determine the risks that potential power shortages will have on a business's products or services as the creation of new data centers becomes governed by power availability.

It also suggested that organizations plan with an anticipation of higher power costs. They should look to negotiating long-term contracts for data center services at reasonable rates while factoring in cost increases when developing new offerings.

Re-evaluating sustainability goals around CO2 emissions may be necessary, Gartner said, as power requirements and power sources change over the next few years.

Firms should aim to use the minimum amount of computing power when developing generative AI products, it added, as well as look at the viability of small language models (SLMs) and edge computing.