Powering intelligence, responsibly

Artificial intelligence is advancing at astonishing speed, but so too are its energy demands. Estimates suggest that a single ChatGPT query can consume nearly ten times more electricity than a Google search¹.

As AI models become larger and more complex, their appetite for power only grows. By 2030, data centres – servers which power AI and cloud services – could consume almost 1,000 TWh of electricity². This is roughly equivalent to Japan's total annual usage³.

Today, training an AI model consumes as much electricity as powering 120 homes for a full year⁴.

So while AI has enormous potential, its environmental toll threatens to undermine the very progress it promises. Without a decisive shift to clean energy, digitalisation could become a climate liability.

Our energy infrastructure is also struggling to keep up. Grid capacity, storage, and transmission networks remain constrained, underfunded and outdated. Against this backdrop, support for the renewable build-out agenda has shown signs of softening.

In response to these challenges, Rothschild & Co convened a Sustainability Sphere focused on Electrification, the transition from fossil fuel based technologies to those powered by electricity.

The roundtable brought together leading experts to explore the problems faced and the catalysts that could drive innovative solutions. A broad range of industries were discussed as being dependent on electrification, with technology – particularly artificial intelligence – standing out as the most prominent. Here, we present the key insights from our roundtable discussion.

From sun to pocket

Meeting continuous AI computing loads with intermittent renewable power is a major challenge. Data centres run around the clock, but renewables like solar and wind are not always available.

An important step towards a solution could be increased renewable energy support. In the UK, a record amount of renewable energy capacity was granted planning permission in Q2 2025⁵, while US tech giants are pledging to bring more renewables online.

Spain and Portugal have also emerged as world leaders in renewable energy, tapping into their warm climate and land, which is ideal for solar panels. However, reliability and predictability remain concerns; both countries suffered a widespread blackout in April.

Commentators rushed to blame solar, but our roundtable discussion cautioned this is misguided. The outage highlighted gaps in grid resilience, not issues with renewable energy sources themselves.

Although Spain leads in renewable generation, it lacks the storage capacity to stabilise output. The country operates about 18MW of standalone battery storage – to put this in perspective, the UK has close to 5.6GW, nearly 300 times more⁶.

Increasing renewable energy alone isn’t enough; we also need to be able to support the baseload demands of a grid that carries a growing share of wind and solar. This includes developing more effective backup power solutions, such as affordable nuclear and long-duration battery storage.

France offers a glimpse of this future: its grid operator now pays wind farms to stabilise frequency, a role once reserved for fossil fuel plants.

Wired for change

It is clear that if we want more renewables, we must invest in better infrastructure. Concerns around current grid capacity have already led cities such as Amsterdam and Dublin to halt new data centre permits.

Yet grid infrastructure remains vastly underfunded and when investment occurs, it takes time to bear fruit. Transformer lead times have stretched from around a year in 2021 to more than 2.5 years in 2024⁷, highlighting the difficulty of scaling networks quickly to meet rising demand. Our roundtable experts stressed the need for a central coordinating body to bring coherence and discipline to long-term strategic planning.

System upgrades should feature advanced sensors and automation (‘smart grid technology’) to plan for variability and allow for bidirectional power flows. Strengthening cross-border interconnections can also provide insurance against local shortfalls, letting countries trade power when needed.

Our view is that decentralisation will define the grid's future. Instead of giant one-way flows, power will come from millions of points, which should improve resilience. Microgrids (localised generation and storage) are increasingly being used by campuses, hospitals and data centres to maintain operations during wider outages.

Ultimately, the modern grid will not build itself – it will take a combination of greater investment, keen foresight and political will.

Power in reserve

As computing gets hungrier, backup and reserve strategies are critical. Today’s data centres rely on batteries and generators to achieve ‘five 9s’ uptime (99.999% availability).

Diesel remains the standby fuel of choice, but battery storage is quickly gaining ground: they respond faster, emit no pollutants at point of use, and can even support grid balancing. Due to advancements and innovations in battery technology, their cost has plummeted, and governments are offering incentives for deployment.

Even so, many batteries currently only provide a few hours of backup. Long-duration storage, capable of covering days or weeks without sun or wind, remains in development. And while emerging chemistries such as flow and sodium-ion batteries show promise, scaling remains elusive and crucial policy support is often patchy.

There has also been a recent resurgence of interest in small modular reactors: compact nuclear systems that could play a key role in backup power generation, but they remain an expensive solution.

Data centres themselves are investing in storage – not only for backup power but also as grid assets. Some large data parks are now negotiating to dispatch their enormous battery arrays for grid balancing when not under full computational load.

Furthermore, software architects are developing AI schedulers that align non-urgent jobs to times of abundant supply, while GPU manufacturers like Nvidia are improving chip power efficiency to squeeze more compute out of every watt.

All of this work helps smooth out peaks in energy consumption and provides a much-needed capacity cushion.

A vision for the future

To meet the challenge of soaring demand from AI, the entire system, from generation to grid to storage, is evolving in lockstep with the data industry.

The result is a feedback loop: the very AI revolution that increases power needs is also driving innovation in the energy sector (for example, by optimising grid management or demand response).

Imagine on-demand, always-available clean power: data halls humming on solar by day and wind by night, all while massive batteries buffer the gaps. Transmissions cables criss-crossing continents, sharing surpluses. Smart software smooths out surges, and even our buildings contribute, via rooftop solar and thermal storage.

This future is technically within reach. It will require big investment from both corporates and governments, smart regulation and continued innovation, ideally coordinated by a central body with a long-term focus – but the trends are aligned.

With the right push, we can have a decarbonised grid that keeps pace with our data-driven world.

Acknowledgements

This Sphere was held in collaboration with Peter Kavanagh, CEO of Harmony Energy.

Rothschild & Co would like to thank the following people for attending the event and contributing to the report: Amy Rennison of Earth Set, Andrea Hartley of Skating Panda, Bill Rossiter of Belmont Estate, James Lee of Lightsource Renewable Energy, John Rastrick of Flotilla, Lindsay Austin of Bayford Group and Fulcrum, Mark Hawthorn of Landmark Group, Matt Ridley of Schroders Greencoat, Robert Barnes of Rothschild & Co Global Advisory, Robin Stopford of Powervault, Scott Harker of Tribus Energy, Stuart Joyner of Redburn Atlantic and William Slynn of Bridges Fund Management.

Sustainability spheres

The Sustainability Spheres is a series of events curated by Becky Orme, Client Adviser and Laura Negus, Investment Associate from Rothschild & Co Wealth Management UK. Each event brings together key stakeholders from specific industries to explore the sustainability challenges they face, the actions needed to catalyse positive change and how capital allocations can help. The inaugural event featured industry experts discussing the future of ‘fast fashion’, a sector that has faced criticism for its unsustainable practices. Attendees engaged in a dialogue on how the industry can integrate more sustainable practices into its business models. Subsequent events in the series delved into topics such as the video gaming industry and regenerative agriculture, focusing on how we can inspire individuals to ‘play for the planet’ and explore innovative ways to ‘grow for tomorrow’.

Past performance is not a guide to future performance and nothing in this article constitutes advice. Although the information and data herein are obtained from sources believed to be reliable, no representation or warranty, expressed or implied, is or will be made and, save in the case of fraud, no responsibility or liability is or will be accepted by Rothschild & Co Wealth Management UK Limited as to or in relation to the fairness, accuracy or completeness of this document or the information forming the basis of this document or for any reliance placed on this document by any person whatsoever. In particular, no representation or warranty is given as to the achievement or reasonableness of any future projections, targets, estimates or forecasts contained in this document. Furthermore, all opinions and data used in this document are subject to change without prior notice.

[1] AI is poised to drive 160% increase in data center power demand | Goldman Sachs

[2] AI is set to drive surging electricity demand from data centres while offering the potential to transform how the energy sector works - News - IEA

[3] AI is set to drive surging electricity demand from data centres while offering the potential to transform how the energy sector works - News - IEA

[4] AI Training Fuels Massive Carbon Costs And Demands Greener Solutions

[5] UK green power surges with record approvals for new renewable energy capacity

[6] Iberia: Why are there no batteries in Spain? - Research | Modo Energy

[7] Supply shortages and an inflexible market give rise to high power transformer lead times | Wood Mackenzie