There is no denying that data centres consume a vast amount of energy. In Ireland, for example, over 80 data centres now account for roughly 21% of national electricity use. That 21% is not only staggering, but it’s a figure that attracts public scrutiny and begs the question of what role these facilities could play in strengthening, not straining, national power networks.
Across the globe, the relationship between data centres and energy systems is changing. Once seen as large, unrelenting consumers of electricity, data centres are now being re-evaluated as flexible assets that can actively support the grid. This marks a considerable shift away from passive consumption to dynamic participation.
A shared challenge
The International Energy Agency (IEA) estimates that data centres could more than double their global electricity demand by 2030, consuming close to 945 terawatt-hours, more than the total annual consumption of Japan. The surge in AI workloads is one key factor. KPMG’s latest Data Centre Survey found that 46% of respondents expect energy use in US data centres to rise by 10–14% each year over the next decade, while nearly one in three foresee growth above 15%.
This sheer scale of expansion presents a shared challenge for both data centre operators and energy providers. The same KPMG research revealed that 76% of utilities cite “lack of grid capacity” as their most critical issue when connecting data centres. Yet the conversation is shifting from one of constraint to collaboration.
From big consumers to grid partners
Smart operators are now recognising that they are a vital part of the grid ecosystem. By working with utilities rather than against them, they can create more resilient and sustainable energy systems. The latest Guidehouse Research report highlights how modest flexibility measures, such as shifting workloads away from peak periods or using stored energy to reduce grid draw, can free up tens of gigawatts of spare capacity without the need for new generation infrastructure.
These are small, but important steps which illustrate what’s possible when data centres are viewed as energy allies rather than energy adversaries.
Building the flexible data centre
To become true partners in the power ecosystem, data centres must be more interactive, capable of generating, storing, and intelligently redistributing energy. This requires both a technology and a mindset change.
Most modern facilities already operate at extraordinary efficiency levels, and many hyperscalers are now reporting power usage effectiveness (PUE) of close to 1.1 or below. Yet efficiency alone is not enough. Facilities that can integrate onsite renewables and participate in demand response markets offer far greater benefits to local and national grids.
For example, a facility equipped with battery storage can sell balancing services to the grid, drawing less energy during peaks and exporting excess power during troughs. The financial rewards are significant, but the broader value lies in stabilising the grid and supporting renewable integration.
This form of “bidirectional participation” could accelerate data centre interconnections while giving utilities breathing space to modernise networks. It’s a pragmatic solution that bridges immediate demand with long-term infrastructure evolution.
The rise of proactive planning
A truly encouraging sign is the growing appetite for collaboration, with participants eager to work together to find shared solutions between utilities and data centre developers. This is a dramatic cultural shift for a sector once defined by secrecy and competition.
Joint planning is becoming the new norm. Utilities are increasingly making infrastructure investments and regional plans in specific locations to accommodate future data centre growth. This aligns energy planning with digital infrastructure growth, ensuring power supply evolves hand-in-hand with capacity demand.
Such alignment can dramatically reduce project timelines. Where interconnection approvals once took years, collaborative models are cutting them to months. For an industry racing to keep up with AI and cloud expansion, that time saving is huge.
Renewable integration for community impact
Data centres are also pioneering renewable generation and storage on-site, reducing their dependency on local grids and contributing directly to decarbonisation.
This dual approach, which combines generating and optimising, enables facilities to deliver benefits that extend far beyond their boundaries. Excess solar or wind energy can be fed back into local networks. Battery systems can smooth fluctuations caused by intermittent renewable output. And microgrid technologies ensure that both operators and surrounding communities have more stable and sustainable access to power.
It is a model that transforms the perception of data centres from isolated power drains to decentralised energy hubs.
Overcoming policy and infrastructure barriers
Of course, challenges remain. Many grids were not designed for two-way energy flows, and regulatory frameworks are still catching up. Commercial models for data centre participation in flexibility markets remain under development, and operators must often cover the costs of load-control technologies themselves.
Progress will depend on continued innovation, supportive policy, and clear incentives. Performance-based tariffs could reward data centres that manage consumption more intelligently or contribute renewable energy back to the grid. These mechanisms will help make flexibility both commercially viable and scalable.
A more balanced power story
The debate about data centre energy use is far from over, but it is evolving. The sector’s growing willingness to collaborate with power providers is reshaping the narrative. Facilities that were once seen as a burden on the grid are emerging as contributors to its resilience and decarbonisation.
This is not just wishful thinking; it is already happening. Globally, utilities and data centre operators are proving that partnership works. With the right technology, incentives, and regulatory frameworks, data centres can help to stabilise grids, accelerate renewable adoption, and make energy systems more flexible for everyone.
