Renewable power pits data centres against energy-intensive industry

Electricity could meet 34% of the industry’s final energy consumption by 2035.

Renewable power could become a point of competition between data centres and energy-intensive industries as both sectors seek resilient energy supplies, according to the International Renewable Energy Agency (IRENA).

IRENA estimates that electricity could meet 34% of industry’s total final energy consumption by 2035, up from 27% in 2023. Greater reliance on renewable electricity could reduce exposure to fossil fuel markets and strengthen energy security as sectors pursue decarbonisation, the agency said.

Industries such as iron and steel, chemicals, and cement have relied on fossil fuels for high-temperature heating and chemical feedstocks. Electric boilers and heat pumps are also expanding the range of industrial processes that can use electricity, including applications requiring higher temperatures.

Renewable electricity could replace fossil fuels in some industrial processes, whilst green hydrogen and renewable bioenergy could serve applications where direct electrification remains difficult.

“If produced locally, renewable-based hydrogen can provide additional renewable-fuelled resilience in iron and steel value chains. The same applies for biogases used as energy carriers in chemical manufacture,” IRENA said.

Renewables are also becoming relevant to data centre power demand as artificial intelligence and digitalisation increase electricity demand.

Data centre operators can use renewable electricity through dedicated generation or renewable microgrids located near facilities, reducing reliance on fossil-fuelled power and the need for costly grid connections.

The growing power requirements of data centres could put them in competition with traditional industries for renewable energy supplies.

IRENA said the availability of renewable resources and the location of energy-intensive industries will determine how that demand is met.

“Regardless, one thing is certain: increasing renewable energy supply can unlock green industrialisation and industrial development in many countries, creating jobs, and holistically benefiting local economies,” the agency added.