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- Brief: Power Demand Growth from AI or AC?
Brief: Power Demand Growth from AI or AC?
The underappreciated power demand growth from air conditioning needs in developing equatorial regions
Mobius Intel Brief:
Forecasts for a step-change in power demand growth from AI-related infrastructure have excited market participants since the initial launch of OpenAI’s chatGPT in November 2022.
As shown in this week’s release of the IEA’s 2025 global energy review, however, AI’s energy needs are inconsequential relative to the power demand growth driven by incremental access to basic life utilities like air conditioning in warm, developing regions that are home to nearly 6 billion of the world’s inhabitants.
Key Intel:
The IEA’s Global Energy Review 2025 showed global electricity consumption in buildings increased by nearly 630 terawatt-hours (TWh) in 2024, accounting for approximately 59% of worldwide growth in electricity consumption last year.
According to the IEA’s data, buildings led electricity consumption growth from industrial sectors by nearly 55% and growth from the transportation sector by approximately 1,473% in 2024. Building-related electricity consumption growth in 2024 was nearly 17% higher than total electricity consumption growth in 2023 (629 TWh v. 538 TWh).
The IEA’s findings reiterate themes from Mobius’ Nov. 2024 research on global air conditioning access. As shown below, over 70% (5.67 billion) of the world’s population live in regions with fewer than 0.25 air conditioning units per capita. Fewer than 20% of the inhabitants in nine of the top ten countries with the highest population-weighted cooling demand have access to air conditioning, and many of these countries are leading drivers of global economic (and energy demand) growth. China, India, and Indonesia collectively purchased nearly 48% of all air conditioning units sold globally in 2023.
