Energy Sector Looks to New Solutions Amid Rising Demand

Energy professionals recognize the pressing need for additional power sources and are exploring innovative technologies and infrastructure to tackle this issue.

“We’re planning to invest around $1.1 trillion in infrastructure over the next five years to keep pace with needs and demands,” stated Exelon CEO Calvin Butler.

By 2024, data centers are projected to account for about 1.5% of global electricity consumption, with demand continuing to escalate. Estimates suggest that these centers will become the fifth largest consumers of energy worldwide, sitting between Japan and Russia in terms of usage.

Exelon, a major utility holding company in the U.S., manages the electric grid infrastructure that supplies power to both homes and businesses.

“As a company focused solely on power transmission and distribution, my day-to-day role is to ensure a safe, dependable, and resilient power grid. I don’t handle power generation directly,” Butler explained. He added, “According to our observations across the PJM network, supply costs have surged by 645% since 2024.”

Innovative Approaches to Power Needs

With the increasing demand for artificial intelligence (AI), companies are taking innovative steps to address energy requirements. Commonwealth Fusion Systems, based in Devens, Massachusetts, aims to contribute reliable 24/7 power to the grid through nuclear fusion, which mirrors the energy produced by the sun and stars.

“By fusing light nuclei like hydrogen, we can release substantial energy as heat, which can then be transformed into electricity,” shared Brandon Thorbom, co-founder and chief scientific officer of Commonwealth Fusion Systems.

A recent study by the organization indicates optimistic views within the scientific community regarding the commercial viability of nuclear fusion.

Commonwealth Fusion Systems claims its ARC fusion plants could generate 50 times the power they consume and provide enough electricity for a small city annually, using the same amount of fuel as a pickup truck can hold. This research involved 58 scientists from top technical universities and was bolstered by public-private collaborations.

“I believe one of these plants could potentially supply power to around 280,000 homes in the U.S.,” Thorbom said, highlighting that the chemical reaction releases approximately 10 million times more energy per unit weight.

Yet, fusion still carries a degree of uncertainty. Experts at the Massachusetts Institute of Technology estimate it could supply anywhere from 10% to 50% of electricity needs, but this likely won’t materialize until 2100. Other scientists note that while connecting these power plants to the grid is a possibility, the process could be costly.

Strategic Location Choices for Data Centers

In response to burgeoning energy needs, some companies are relocating data centers to regions with lower energy requirements instead of scaling up existing capacities.

Philip Sachs from Nscale, which constructs AI infrastructure, remarked on the appeal of Nordic countries: “They’re affluent, stable, well-educated, and business-friendly. Moreover, they offer abundant green electricity at a low cost.” He suggests that there’s minimal competing industrial demand, making it an optimal location for data centers.

Nscale not only builds data centers in the Nordics but also purchases Nvidia chips to rent out for cloud and AI services. Sachs, who oversees operations in Europe, the Middle East, Africa, and Global Affairs, emphasized the importance of leveraging appealing power markets in this AI era.

Local Ecosystems and Efficiency

EcoDataCenter’s John Wernvik highlighted advantages in the Nordic region, such as abundant land and green energy. The cooler climates reduce energy needs for hardware cooling. “During the colder months, the heat generated can actually be used for home heating, creating an efficient local ecosystem,” Wernvik noted.

Wernvik also mentioned that EcoDataCenter collaborates with major tech companies to meet their computing requirements, even planning an airstrip in Sweden to support data center capacity.

The Norwegian energy market presents a particularly attractive scenario; roughly 50% of the country lies above the Arctic Circle, and energy costs are among the lowest in Europe. Sachs pointed out that the limited industrial demand for power there stands in stark contrast to regions like the U.S.

“In parts of northern Norway, our data centers are situated away from the populous southern areas, meaning local electricity pricing remains unaffected by major urban demands,” he said.

Currently, there are about 134 data centers in the Nordic countries, with 71 expected to be operational soon.

“The cost of energy significantly influences operating large AI systems, so ensuring sustainable and efficient energy use is crucial for our clients,” Wernvik explained. He noted an exponential increase in data center developments across Scandinavia in the past two years, driven by these principles.

Building data centers in the Arctic can be expensive. Cities like Oslo, Stockholm, Helsinki, and Copenhagen rank high for construction costs, according to Turner & Townsend.

Despite the challenges posed by adapting to growing energy demands, companies globally are committed to tackling the issue.

“There’s a strong link between energy use and living standards,” Sobom said. “We are continually exploring ways to generate more energy safely and cleanly.”