A new report by the International Monetary Fund (IMF) has warned that the rapid expansion of Artificial Intelligence (AI) will significantly increase global electricity demand — potentially tripling power consumption in countries like Nigeria, the United States, and others within the next five years.
Titled “AI Needs More Abundant Power Supplies to Keep Driving Economic Growth,” the report highlights the critical energy needs of data centers that power AI technologies, calling for urgent action from governments and energy planners worldwide.
“Electricity demand from data centers — already on par with countries like Germany or France — could reach levels comparable to India by 2030,” the IMF said. “This would surpass even the projected electricity use of electric vehicles, with AI data centers requiring 1.5 times more power by the end of the decade.”
In the United States, which hosts the highest number of data centers globally, energy consumption from server farms is expected to more than triple, potentially exceeding 600 terawatt-hours by 2030.
Nigeria Faces Mounting Power Challenges
The warning comes at a critical time for Nigeria, where over 90 million people still lack access to electricity, according to national data. While the country is actively pushing AI development through initiatives such as the National AI Strategy, the National Centre for AI and Robotics (NCAIR), and the AI Academy Program, the IMF says surging electricity demand from the tech sector may place even greater strain on the already fragile grid.
The IMF noted that if energy supply grows alongside AI demand, the result could be moderate price increases and improved overall capacity. However, if power supply fails to keep up, steep cost hikes may hurt consumers and businesses and potentially stall AI sector growth.
Environmental Risks and Policy Gaps
The report also highlighted the environmental impact of rising AI power needs. Between 2025 and 2030, AI-driven electricity consumption could generate an additional 1.7 gigatons of greenhouse gas emissions, nearly equivalent to Italy’s energy-related emissions over the same period.
Although efficient, open-source AI models like DeepSeek reduce energy use per query, their affordability and accessibility could drive broader adoption — offsetting gains in efficiency with increased demand.
“The overall impact on electricity consumption remains uncertain. That uncertainty could discourage timely energy investments, potentially leading to supply gaps and higher energy costs,” the IMF warned.
Call for Coordinated Action
To address the growing challenge, the IMF urged policymakers and private sector leaders to work together to create energy strategies that support AI growth without destabilizing power grids or driving up costs.
The Fund also stressed the importance of diversifying energy sources to prevent price volatility and reduce emissions, saying such measures are key to ensuring that AI fulfills its economic promise without jeopardizing sustainability.
“The future of AI depends not only on algorithms and data — but on power,” the report concluded.
