As China experiences a surge in the number of data centers driven by the proliferation of artificial intelligence (AI) and other technologies, the corresponding rise in energy demand and emissions has become a pressing issue. By the end of 2023, China boasted 449 data centers, the highest within the Asia-Pacific region. The country accounts for 25% of global data center electricity consumption, ranking second only to the USA. With AI’s rising influence, the future increase in electricity demand by these data centers remains uncertain.
Rising Energy Demand
Data Center Growth and Energy Consumption
Data centers have become a significant contributor to China’s electricity demand, which is forecasted to increase substantially over the coming years. Starting in 2020, data centers consumed 200 TWh, constituting approximately 2.7% of the country’s total demand. This figure is expected to double by the end of the decade. According to various projections, data center electricity demand could soar to 600 TWh by 2030, leading to significant carbon dioxide emissions, which pose environmental challenges for China.
Energy Consumption Projections
Despite the vital role data centers play in energy consumption, industrial growth and the electrification of transportation and heating remain the primary drivers of increasing electricity demand in China. Currently, data centers utilize between 0.9% and 2.7% of China’s annual electricity. This is relatively small when compared to the manufacturing sector, which saw a 300 TWh increase in electricity consumption in just one year, highlighting the larger energy needs of industrial sectors compared to data centers.
Addressing Carbon Emissions
Policy Interventions
China has initiated a series of policy interventions to address the environmental impact of its rapidly growing data center sector. In 2021, the government unveiled a three-year action plan focused on creating new data centers that are efficient, clean, optimized, and circular. This initiative includes several measures aimed at reducing energy consumption and improving the overall energy efficiency of data centers. Key strategies include enhancing the power usage effectiveness (PUE) of data centers, a critical metric for determining their energy efficiency.
Power Usage Effectiveness (PUE) Improvement
By 2024, the average PUE of data centers in China had improved from 1.54 to 1.48. The goal is to further reduce this figure to 1.25 by 2025 for large-scale data centers. This target reflects China’s commitment to improving energy efficiency in the data center sector. Such efforts bring the country’s standards in line with global benchmarks, such as Germany’s average PUE target of 1.5 by 2027. These improvements are expected to play a significant role in reducing the carbon footprint of data centers and enhancing their sustainability.
Regional Initiatives and Renewable Energy Integration
East Data West Computing Project
One of the most prominent efforts in China’s strategy to curb data center energy consumption is the “east data west computing” project, which was launched in 2022. This initiative aims to process data generated in the populous eastern provinces in the western regions of China, where larger solar and wind farms are situated. By situating data centers in the west, closer to renewable energy sources, the project seeks to alleviate the power demand pressures on the eastern metropolitan areas and promote the use of renewable energy in data centers.
Pairing Data Centers with Renewable Energy
Regional governments are also playing a significant role in integrating renewable energy with data centers. For instance, Inner Mongolia has implemented policies to pair data centers with renewable energy facilities. Beijing’s local government has introduced financial incentives designed to improve the PUE of data centers. Additionally, the Guangdong province has undertaken exploratory efforts to investigate the feasibility of underwater data centers. These data centers would have significantly reduced cooling technology requirements and energy consumption, further contributing to the sector’s energy efficiency goals.
Overcoming Geographical and Water Challenges
Renewable Energy Distribution
China faces substantial challenges in the geographical distribution of its renewable energy resources. Most renewable energy sources are located in the northern regions, while the highest demand is concentrated in the southeastern coastal areas. This geographical disparity necessitates the long-distance transmission of renewable power, which presents additional hurdles, including high operational costs. The complexities involved in interprovincial trading of green power further exacerbate these challenges.
Water Use Efficiency
Data centers’ demand for water, primarily used for cooling, presents another significant challenge, especially in the arid regions of western and northern China. Several local policies have been instituted to address this issue. Regions like Beijing, Ningxia, and Gansu have mandated higher water use efficiency standards. These policies also call for the phasing out of data centers with low water efficiency, aiming to mitigate the potential exacerbation of water stress in these already dry areas.
Future Outlook
Cleaner Energy Mix
As data centers continue to expand to support AI workloads, leading to the development of hyperscale data centers, a cleaner energy mix in China’s overall power structure is becoming increasingly crucial. Despite significant efforts to enhance energy efficiency in data centers, the country’s heavy reliance on coal remains a key challenge. Currently, approximately 60.5% of China’s power mix is derived from coal, underscoring the importance of shifting towards cleaner energy alternatives to reduce the environmental impact of data centers.
Renewable and Nuclear Power Integration
China is experiencing a significant increase in data centers, fueled by the advancement of artificial intelligence (AI) and other emerging technologies. This growth has led to a corresponding rise in energy consumption and carbon emissions, creating a significant challenge. By the end of 2023, China had established 449 data centers, the highest number in the Asia-Pacific region. This represents a substantial portion of global data center electricity usage, with China accounting for 25%, second only to the United States. As AI continues to expand, the future demand for electricity from these data centers remains unpredictable. This surge in data centers underscores the importance of addressing energy efficiency and sustainability. As more data is processed, stored, and analyzed, the electricity required to power these vast facilities increases, potentially leading to greater environmental impacts. Therefore, it is crucial for China to develop and implement innovative strategies to manage energy consumption and reduce emissions while supporting technological growth.