IMF Forewarns Of Danger Side Applying Artificial Intelligence (AI)

The soaring reception that has greeted artificial intelligence application globally may be confronted by an emergent hurdle.

The International Monetary Fund (IMF) has alerted that the danger may come by way of electricity to power its data centres,.

The surging demand for such electricity could create new challenges for energy infrastructure, prices, and emissions globally, the fund said in a statement.

Noting that AI technologies are reshaping productivity, employment, and investment patterns worldwide, with the potential to significantly raise the average pace of annual global economic growth, it adds these come with a price.

According to it, this economic potential is closely tied to a steep rise in electricity demand, particularly from data centers that power AI models and cloud computing.

Making reference to estimates by the Organisation of the Petroleum Exporting Countries (OPEC), the IMF submitted that the data centers consumed about 500 terawatt-hours (TWh) of electricity in 2023, a number it believes could triple to 1,500 TWh by 2030, more than doubled the annual average from 2015 to 2019.

That would also rival the current electricity consumption of India, the world’s third-largest electricity consumer.

It cited the level of usage of electricity in France or Germany, adding that by 2030, it could be 1.5 times more power than is consumed by electric vehicles (EVs).

The United States, which hosts the world’s largest concentration of data centers, is expected to lead the growth in energy usage, the observation goes, even as projections by McKinsey & Co. indicate that electricity consumption from US server farms could exceed 600 TWh by 2030, more than triple current levels.

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The IMF warns that insufficient investment in electricity infrastructure could threaten the very benefits AI promises.

According to it, while increased demand could incentivize more electricity production and only modestly raise prices, sluggish responses might result in steep energy costs that hurt consumers, businesses, and ultimately stall AI-related growth.

The global economy could also face delayed or reduced investment in AI if electricity becomes unreliable or unaffordable for major tech infrastructure operators.

“Increasing electricity demand from the technology sector will stimulate overall supply, which, if responsive enough, will lead to only a small increase in power prices.

“More sluggish supply responses, however, will spur much steeper cost increases that hurt consumers and businesses and possibly curb growth of the AI industry itself,” the IMF stated.