The Viewpoint: UK electricity grids crackle amid soaring AI demands

Artificial Intelligence (AI) remained a key point of investor debate in 2025 as vast amounts of money (Gartner estimates $1.5 trillion) were ploughed into building the infrastructure to usher in what some have called the fourth Industrial Revolution.

The prior three revolutions were each inextricably linked to energy – steam power, electricity and the growth of the digital world, and a fourth is likely to have profound energy impacts too.

Much of the AI investment being made is in data centres, which are the backbone of the digital economy. These clusters of computer servers consume staggering amounts of electricity, not just to power the computing itself, but also to power the cooling systems that dissipate the large amount of heat that these severs produce. A single data centre can consume 100 megawatts of power.

For context, a typical UK household uses about 3000 kilowatts of electricity each year, so the data centre demand is equivalent to over 30,000 homes – a medium sized town. Currently 1-2% of the world’s power demands come from data centres and if AI grows as it is predicted to, this figure is likely to grow. Furthermore, data centres require reliable uninterrupted power and therefore often require back-up generation or battery systems to achieve this. This is an important consideration as electricity generation sources become more diverse and electricity grids less stable.

Currently 1-2% of the world’s power demands come from data centres and if AI grows as it is predicted to, this figure is likely to grow.

This growth in power demand could have profound impacts on the energy transition away from fossil fuels. Already, despite impressive amounts of renewable electricity generation being built and renewable power forming a growing proportion of overall generation, absolute fossil fuel global demand has not fallen. It has so far been an energy addition rather than transition.

This growth in power demand could have profound impacts on the energy transition away from fossil fuels.

Another important consideration for the UK is about electricity prices, which in a global context are high. Much has been made of the energy cost impacts of industries such as chemicals and steel making. With high power prices, can the UK thrive in the latest energy hungry industry, AI?

Ultimately, in order for the UK to remain competitive, the government will need to address the substantial wait times for grid connections but also consider how best to deliver a cost effective and reliable energy system, while still trying to hit their ambitious climate goals.

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