AI data centres pressure grids as investors pivot

Technology companies are competing for access to power and transmission capacity, while utilities reassess how future demand growth will affect reliability and investment requirements. In its Energy and AI report, the International Energy Agency expects global electricity consumption from data centres to roughly double by 2030, reaching about 950 terawatt-hours annually, with AI-focused facilities driving a disproportionate share of that growth. The agency says electricity demand from AI-focused data centres is projected to grow significantly faster than overall data centre demand as governments, utilities and

infrastructure providers adapt to rising compute requirements and increasing pressure on power systems. Matthew van der Linden, CEO and founder of energy company, Flow Power, says Australia is beginning to experience similar pressures. “If you go look at energy demand over the past 10 years, it’s been pretty much a flat line of energy growth across the market,” van der Linden says. “Now it’s going up in a very dramatic curve.” Van der Linden says AI adoption could fundamentally alter electricity demand over time as

businesses and consumers integrate increasingly energy-intensive technologies into daily operations. “The change that’s coming there is not small, it’s hundreds of megawatts and gigawatts of load over time,” he says. That growth is arriving as the electricity system itself becomes more complex. Renewable generation has expanded rapidly across Australia, while batteries, rooftop solar, electric vehicles and distributed energy systems are introducing new layers of variability into the grid. For energy businesses, the traditional model of simply generating or retailing electricity is becoming less effective in

an environment where supply and demand must increasingly be co-ordinated in real time. Van der Linden says that is driving the emergence of platform-led energy businesses that combine generation, storage, customer participation, metering, software and market trading. “The retailer of the future is significantly involved on both sides of the equation,” he says. “It’s about connecting the energy consumer to the generation.” The ability to manage and respond to live market signals is becoming increasingly important as wholesale electricity prices fluctuate throughout the day depending

on renewable output and system demand. That is creating new incentives for businesses and households to become more active participants in energy markets. Flow Power’s model is designed to enable customers to respond directly to market conditions, including shifting electricity usage toward periods that may offer lower prices and stronger renewable generation. Van der Linden says residential electrification is likely to accelerate that shift, particularly as battery uptake and electric vehicle adoption expand. “The difference between paying to charge your car and getting paid to

charge your car is literally real,” he says. “Most people wouldn’t know that.” Technologies such as smart metering and AI-driven live data will increasingly allow households and businesses to automate those decisions, he says. “The grid is moving so much quicker today,” he says. “Live data is key.” The implications extend beyond households. Stan Kolenc, senior managing director and head of Asia, private markets group at OPTrust and chairman of Flow Power, says electricity resilience is becoming a core economic issue for long-term investors. OPTrust,

a Canadian pension fund manager with around $30 billion in net assets, acquired a 51 per cent stake in Flow Power in 2018 as part of a long-term infrastructure strategy focused on businesses positioned to benefit from structural changes in energy markets. “Electricity resilience is the primary condition for economic growth,” says Kolenc. “Investors are increasingly focused on how grids will support expanding demand from AI, electrified transport and industrial decarbonisation over coming decades.” “The growth is coming from new sectors such as AI, data

centres, electrification, industrial decarbonisation and transport electrification.” He notes the structure of electricity demand itself is changing as AI infrastructure and electrification alter where and when power is consumed. “The value of location is going to become increasingly important,” he says. “Where your load sits relative to demand is going to be increasingly determinative.” That is increasing the importance of flexibility across the electricity system. Kolenc says future infrastructure investment will require not only renewable generation and transmission, but also batteries, flexible demand and software

capable of balancing increasingly complex flows of energy. “The value of flexibility is going to increase. Flexible demand is going to be key,” he says. The decentralisation of electricity systems means value is increasingly shifting away from simply producing power toward co-ordinating many smaller and more variable sources of supply and demand. “If you’ve got a good platform, you can see the customer demand, optimise storage, manage flexible load and integrate all these devices,” he says. “The platforms are attractive because the platform can evolve

as the market evolves.” That evolution is also changing how investors assess energy businesses. Kolenc says long-term infrastructure investors are placing greater emphasis on active ownership, governance and operational capability as energy systems become more dynamic. “It’s becoming much more of a living, breathing thing,” he says. Australia’s renewable transition has already moved beyond proving the viability of solar and wind generation. Increasingly, the focus is shifting toward how the system itself operates at scale. Kolenc says the next phase of the transition will depend

on the ability to intelligently co-ordinate generation, storage and consumption across the grid. “The clean energy transition was historically an electron-only story, but it’s not going to be won by electrons alone.” As AI adoption, electrification and renewable penetration continue accelerating simultaneously, electricity systems are likely to become more central to economic competitiveness, infrastructure planning and industrial development. Flow Power has been among the early movers in developing a firmed renewables offering for data centres designed to support long-term price certainty through new renewable generation

backed by battery storage. The offering reflects growing expectations that new data centre capacity will need to be matched with additional renewable energy sources. For the energy sector more broadly, the focus is shifting beyond simply generating more power to building systems and services capable of managing complexity, reliability and participation at a scale the market has not previously experienced. To find out more, please visit Flow Power.

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