Data Centers, EVs Boost Energy Demand in Mexico and US

The installation of new data centers and the increasing adoption of electric vehicles are accelerating the growth of electricity demand in Mexico and the United States, with a significant increase in the adoption of sustainable energy in both countries projected to meet this growth. 

Growth in electricity demand for data centers will be driven primarily by those focused on artificial intelligence (AI), which consume more electricity compared to traditional computing. Rystad Energy estimates that the combined expansion of traditional and AI data centers, along with chip foundries, will increase demand by 177 TWh between 2023 and 2030, reaching a total of 307 TWh, more than double the 2023 levels of 130 TWh. 

Mexico currently has 109 data centers in operation, 21 under construction and another seven announced for the next five years. In terms of energy consumption, data centers in operation consume 111.5 Mega Watts (MW), those under construction will require 475.7 MW and future infrastructure will demand 1,017 MW, according to the Mexican Association of Data Centers (MEXDC). 

In total,  the data center industry in Mexico is projected to require an additional 1,492.7 MW over the next five years, positioning the country as the second-largest consumer of electricity for this sector in Latin America. Companies like Equinix emphasize the need to invest in renewable energy and establish key initiatives such as optimizing air flow, adjusting operating temperatures, and using liquid cooling to promote the sustainable development of these centers.

Electric vehicles will also emerge as the second major catalyst for electricity demand growth in the United States through 2030, according to Energy Connects. In 2023, electricity consumption in the transportation sector was 18.3 TWh. By 2030, this figure is projected to increase to 131 TWh, driven by the expansion of battery electric vehicles (BEVs).

"The growth in electricity demand from these two segments is equivalent to the total electricity demand of a country like Turkey," said Surya Hendry, analyst, Rystad Energy. "This growth is a race against the clock to expand power generation without saturating electricity systems. Renewable energy is key to meeting this demand and providing the scalability needed for US electric systems to endure."

In Mexico, the government is working on controlling energy demand and promoting the development of a Smart Grid, according to the Energy Regulatory Commission (CRE). The CRE, according to Expansión, also plans to issue guidelines for the integration of load infrastructure in the General Distribution Networks and the National Transmission Network.

Despite the growth, according to INEGI, electric vehicles represent only 1% of the automotive market in Mexico. However, it is projected that by 2036, 32.4% of vehicles sold will be electric.

Rystad Energy also forecasts that total US energy demand will increase by 175 TWh between 2023 and 2030, reaching approximately 4,500 TWh, according to Reuters. To support this growth, renewable energy capacity continues to expand, supported by Inflation Reduction Act (IRA) incentives. 

"Coal dependence has declined, and this trend is expected to continue, with a decline in coal generation and an increase in renewable energy generation," reads an Energy Connects article on the topic. "The energy mix will be increasingly defined by growth in renewables and declining coal generation, supported by ARI and lower costs for solar and wind generation technologies."

Rystad also noted that solar PV capacity will increase by 237 GW between 2023 and 2030 in the United States, while wind capacity will grow by 78 GW, enough to meet the growing demand for power generated by data centers and electric vehicles, while continuing to displace coal in the generation mix.

Mexico's energy future faces significant challenges as domestic demand for oil and gas continues to grow, while domestic production declines. According to Wood Mackenzie, a 2% increase in hydrocarbon demand is expected during the current decade, exacerbating the country's dependence on imports. At the same time, although there is significant potential in untapped resources, approximately 60% remains undeveloped.

"For an economy the size of Mexico, a 35% reduction in greenhouse gas emissions requires significant financial support from both the government and the private sector to develop renewable supply, infrastructure and increased energy efficiency," said Adrian Lara, upstream analyst for Latin America, Wood Mackenzie.