Data center end-market electrification investments to hit $191b annually by 2030

Investing.com — As the AI revolution drives significant growth in data center infrastructure, electrification investments in this sector are projected to reach $191 billion annually by 2030, according to UBS. 

The figure represents a nearly 16% annual growth rate from 2023 levels, underscoring the immense demands placed on power systems by advancing AI technologies.

The bank said in a note Thursday that at the core of this surge is the rise of generative AI, which relies on graphics processing units (GPUs) for parallel computing. 

Data centers, already heavy power consumers, are said to be experiencing a sharp increase in aggregate scale and power density. 

“Computing power and server resources contribute to about 40% of the energy consumption in AI data centers,” said UBS.

The expansion is exemplified by projects like Stargate, a $500 billion AI infrastructure initiative announced earlier this week. 

Oracle (NYSE:) Chairman Larry Ellison revealed that 20 data centers, each spanning half a million square feet, are under construction as part of the project. 

With global AI competition intensifying, UBS expects both new data centers and capacity expansions in existing ones to drive sustained growth in electrification investments.

“The Research Institute projects data centers may use up to 9% of all electricity generated in the US by 2030, up from 4% today,” wrote UBS.

They added: “Globally, the International Energy Agency notes that data center electricity consumption could more than double by 2026 relative to the 2022 base of 460 TWh.”

Beyond AI, UBS says increased electrification across transport, heating, and industrial sectors will demand further investment in grid infrastructure, including power transmission, distribution, and renewable energy integration. 

UBS emphasizes that the accelerating shift will require at least $3 trillion in annual global spending by 2030, presenting growth opportunities across utilities, infrastructure, and power equipment.

The bank concludes that while the AI boom attracts attention, the power and resources sector holds significant long-term investment potential.