Japan may need 50% more electricity for hungry, hungry AI and chip fabs

While Tokyo pours billions into revitalizing chipmaking sector, it might want to check out the grid

Japan reckons it may need to generate 50 percent more electricity by 2050 because of growing local demand from chipmaking and datacenters running AI. The move follows a warning by DigitalBridge that it may run out of power within two years.

The growing burden placed on power grids by high tech industry have caused concerns in various countries. The latest is Japan, where the government estimates that energy output will need to grow from 1 trillion kilowatt-hours (kWh) projected for the current decade to about 1.35-1.5 trillion kWh by 2050.

This expansion in generating capacity will be needed to meet the demand Tokyo expects as more datacenters, chip factories and other energy-consuming businesses come online, according to Reuters.

Unless Japan is able to boost its renewable energy output, the government may not be able to guarantee a stable supply of power, it said. The findings were published in a report that will inform Tokyo's strategy on decarbonization and industrial policy for 2040, which it is said to be aiming to finalize by next year.

Japan is pouring the equivalent of billions of US dollars into revitalizing its chipmaking industries, which includes luring overseas outfits like TSMC with generous subsidies to build new fabrication plants; and investing in its own new semiconductor company, Rapidus that aims to do the same and start producing 2nm silicon by 2025.

The recent AI craze is leading to increased global demand for higher performance infrastructure with power-sucking GPU accelerators, and datacenter operators are more than happy to supply that need. Digital Realty announced plans last year for bit barns supporting 70 kilowatts of power per rack, for example, or even up to 90kW if required.

The CEO of another datacenter operator, DigitalBridge, warned recently that availability of power is rapidly becoming a constraining factor on his business.

"We started talking about this over two years ago at the Berlin Infrastructure Conference when I told the investor world, we're running out of power in five years," Marc Ganzi told analysts during DigitalBridge's Q1 2024 earnings conference earlier this month.

"Well, I was wrong about that. We're kind of running out of power in the next 18 to 24 months," he added.

Ganzi said that for the next 5-plus gigawatts of capacity the company was looking to build, it was going to have to get more creative.

"We try to locate certain of those big AI datacenters in locations that maybe are less latency sensitive. We try to co-locate those opportunities closer to renewable energy and we try to create energy independence or grid independence. And those are the things that we're thinking about," he said, adding: "So the next generation of datacenters are perhaps going to be in different locations."

But DigitalBridge isn't the only organization to warn about growing tech industry energy consumption recently.

In April, Arm CEO Rene Haas claimed that power consumption by AI datacenters could hit 20 to 25 percent of the US power grid capacity by 2030, if left unchecked.

The International Energy Agency (IEA) rang the alarm earlier this year that global electricity demand from those data dormitories could double by 2026, and in the most extreme case, could account for 32 percent of Ireland's total electricity usage by the same year.

John Pettigrew, the CEO of Britain's National Grid, warned in March that bit barn power consumption in the UK is on track to grow 500 percent over the next decade, again if left unchecked. ®

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