Global investment in data centers is set to top $580 billion in 2025, exceeding the $540 billion expected to be spent on oil supply during the same period, according to a new report by the International Energy Agency on Wednesday.
The latest edition of the IEA's World Energy Outlook 2025 highlighted surging investments in data centers, echoing the view that "data is the new oil."
Countries are facing rising energy security threats and long-term risks, placing energy at the center of global geopolitical and economic tensions, it noted, urging governments to diversify energy supplies and strengthen cooperation to better navigate growing uncertainty and turbulence in global markets.
The report outlines three main scenarios to assess the implications of different policy, investment and technology choices for energy security, affordability and emissions.
It finds that demand for energy services is set to grow sharply in the coming decades, especially in mobility, heating, cooling, lighting and increasingly for data and AI-related services.
Emerging economies led by India and Southeast Asia, alongside the Middle East, Africa and Latin America, are expected to increasingly shape global energy markets. Together, they are taking the baton from China, which accounted for half of global oil and gas demand growth and 60% of electricity demand growth since 2010.
At the same time, new vulnerabilities are emerging. The report warns that critical mineral supply chains which are essential for power grids, batteries, electric vehicles and AI chips, are heavily concentrated, with a single country dominating the refining of 19 out of 20 key energy-related minerals.
Geographic concentration in refining has deepened since 2020, especially for nickel and cobalt, and reversing this trend will require stronger government action.
Electricity sits at the heart of modern economies, with demand growing much faster than overall energy use in every scenario.
Investment in electricity supply and end-use electrification now accounts for half of global energy spending. Although electricity currently makes up about 20% of global final energy consumption, it is the dominant source for sectors representing more than 40% of the world economy, and the main source of energy for most households.
A key challenge for energy security, the report notes, is how quickly new grids, storage systems and flexible power resources can be deployed. Since 2015, investment in electricity generation has risen by nearly 70%, but annual grid spending has grown at less than half that pace.
Renewables are expanding faster than any other major energy source, led by solar power. By 2035, 80% of global energy consumption growth will take place in regions with high-quality solar resources.
Nuclear energy is also making a comeback after two decades of stagnation, with global capacity set to rise by at least a third by 2035.
- Oil and gas markets remain exposed to geopolitical risks
In the near term, the report projects ample global supplies of oil and gas. Oil markets already reflect this, with prices steady around $60 to $65 per barrel despite geopolitical fragility. A similar easing of natural gas markets is expected as new liquefied natural gas (LNG) export projects come online.
Final investment decisions for new LNG projects surged in 2025, with around 300 billion cubic meters of new annual export capacity due to start operation by 2030, a 50% increase in global LNG supply. About half of the new capacity is being built in the US and another 20% in Qatar.
Easing near-term market balances for oil and gas are no cause for complacency, the report notes. Both markets remain exposed to geopolitical risks. Weaker climate policies or lower prices could quickly erode existing buffers if demand rebounds faster than expected.
The report also warns that the world is falling short on two long-standing goals: universal energy access and tackling climate change. About 730 million people still live without electricity, while nearly 2 billion rely on cooking methods harmful to health.
Even under the most ambitious scenarios, the world is set to surpass 1.5°C of warming in the coming decades. However, the IEA says reaching net zero emissions by mid-century could bring temperatures back below that threshold in the long term.
Meanwhile, energy systems worldwide are already coping with the impacts of climate change. The report underscores the urgent need to strengthen resilience against extreme weather, cyberattacks and other threats. In 2023, disruptions to critical energy infrastructure affected more than 200 million households, with power line damage accounting for about 85% of incidents.
- Data center investment to surpass oil spending
Commenting on the report, IEA president Fatih Birol said: "There is no other time when energy security tensions have applied to so many fuels and technologies at once a situation that calls for the same spirit and focus that governments showed when they created the IEA after the 1973 oil shock."
Birol said governments must balance energy security with goals on affordability, access, competitiveness and climate change.
"In a break from the trend of the past decade, the increase in electricity consumption is no longer limited to emerging and developing economies," he said. "Breakneck demand growth from data centers and AI is helping drive up electricity use in advanced economies, too."
"Global investment in data centers is expected to reach $580 billion in 2025," Birol added. "Those who say that 'data is the new oil' will note that this surpasses the $540 billion being spent on global oil supply – a striking example of the changing nature of modern economies."
By Handan Kazanci
Anadolu Agency
energy@aa.com.tr
