ARTICLE
AI energy demand to climb in 2025-26 despite efficiency gains
Bloomberg Intelligence
This analysis is by Bloomberg Intelligence Senior Industry Analysts Rob Barnett and Patricio Alvarez with contributing analysis by Alessio Mastrandrea. It appeared first on the Bloomberg Terminal.
US power demand from data centers could surge 20-40% in 2025 with strong double-digit growth likely to persist in 2026-30, based on our analysis, despite efficiency gains from Ant Group, DeepSeek and others. Rapid power demand might lift consensus revenue for First Solar, Enphase and energy peers like RWE that supply solar, gas and battery storage.
Efficiency gains unlikely to curb energy appetite
Rapid growth in power demand from AI data centers might eventually be curbed if more efficient algorithms and processors are deployed. Ant Group on March 24 said it used Chinese-made semiconductors to develop new AI models that promise to cut costs by about 20%. We believe energy use will decline by a similar amount, based on the company’s claims.
New algorithms developed by DeepSeek might also deter power demand growth from AI, yet near-term rapid consumer adoption of AI tools may overwhelm promised efficiency gains.
US data-center power demand poised for rapid growth
US power demand from data centers might grow 4x by 2032, assuming efficiency gains like those reported by Ant Group and DeepSeek materialize. Data centers would use about 7% of total US electricity demand under this scenario, and under our more optimistic case of 10x growth by 2032, the share could be closer to 20% of the US total.
The build-out of data centers, cloud infrastructure and other IT resources to enable such growth is likely to be accompanied by a surge in power demand. Spending on generative AI, including hardware, software and other IT services, might reach $1.8 trillion by 2032, based on analysis by BI’s global technology team.
Quickly built solar can help fuel AI power needs
Industrywide solar sales declined in 2024 for the first time since 2012, yet a rebound appears likely in 2025-26, with consensus-topping growth possible due to rapidly expanding demand from data centers. First Solar will likely remain among the fastest-growing companies in our module-manufacturing peer group this year, with potential for sales to surge 30%. Peers might see double-digit sales gains in 2025-26.
Given their focus on ESG and sustainability goals, Meta, Microsoft, Amazon.com, Alphabet and other AI hyperscalers could have a strong preference for lower-emitting sources of power, particularly solar, wind and storage facilities.
European renewable peers may see volume, price boost
RWE and Engie are among European utilities’ exposed to the potential surge in US power demand driven by the rollout of AI and data centers, with plans to expand their renewable fleets 10-15% a year in 2025-27. The US will likely remain the largest data-center market, based on DCByte data, with committed and projects under construction implying growth of 150% or more in the next 3-4 years.
Renewable-power providers might get a volume and price boost from rising data-center energy use as climate goals steer demand for renewables, while the need for more grids could lift capital spending at regulated peers like National Grid and Iberdrola.
First solar Ebitda margin significantly exceeds most peers
First Solar module production trails large global peers
Bloomberg Terminal subscribers can access full version of this analysis via BI <GO>.
The data included in these materials are for illustrative purposes only. The BLOOMBERG TERMINAL service and Bloomberg data products (the “Services”) are owned and distributed by Bloomberg Finance L.P. (“BFLP”) except (i) in Argentina, Australia and certain jurisdictions in the Pacific Islands, Bermuda, China, India, Japan, Korea and New Zealand, where Bloomberg L.P. and its subsidiaries (“BLP”) distribute these products, and (ii) in Singapore and the jurisdictions serviced by Bloomberg’s Singapore office, where a subsidiary of BFLP distributes these products. BLP provides BFLP and its subsidiaries with global marketing and operational support and service. Certain features, functions, products and services are available only to sophisticated investors and only where permitted. BFLP, BLP and their affiliates do not guarantee the accuracy of prices or other information in the Services. Nothing in the Services shall constitute or be construed as an offering of financial instruments by BFLP, BLP or their affiliates, or as investment advice or recommendations by BFLP, BLP or their affiliates of an investment strategy or whether or not to “buy”, “sell” or “hold” an investment. Information available via the Services should not be considered as information sufficient upon which to base an investment decision. The following are trademarks and service marks of BFLP, a Delaware limited partnership, or its subsidiaries: BLOOMBERG, BLOOMBERG ANYWHERE, BLOOMBERG MARKETS, BLOOMBERG NEWS, BLOOMBERG PROFESSIONAL, BLOOMBERG TERMINAL and BLOOMBERG.COM. Absence of any trademark or service mark from this list does not waive Bloomberg’s intellectual property rights in that name, mark or logo. All rights reserved. © 2025 Bloomberg.