AI Boom Sparks Power Crisis: Data Centers Strain Local Grids
AI Boom Sparks Power Crisis: Data Centers Strain Local Grids
The rapid expansion of data centers driven by advancements in artificial intelligence (AI) is leading to severe power shortages in surrounding areas. According to a report dated October 29, 2025, the surge in AI data center construction is causing blackouts and water scarcity issues in neighboring communities. The intensive computational demands of AI training, with tens of thousands of GPUs operating simultaneously, create significant fluctuations in power demand, placing immense pressure on existing power grids. Experts warn that if this trend continues, inadequate power grid infrastructure could trigger nationwide blackouts. While the explosive growth of data centers is essential for AI development, it's also creating unforeseen consequences and fueling significant social debate.
The increasing power consumption of data centers was a predicted problem, but the speed of AI advancements and the scale of data center construction have outpaced expectations, exacerbating the issue. The International Energy Agency (IEA) projects that data center power consumption will more than double by 2030. This could worsen global energy imbalances, particularly in regions with unstable power supplies. Data center operators are investing in energy-efficient technologies, but they are struggling to keep up with the soaring power demand. Some are calling for stricter regulations on data center construction and greater adoption of renewable energy sources. South Korean President Jae-myung Lee is reportedly working closely with relevant ministries to find solutions to these problems.
The United States is also grappling with the power demands of data centers. America's aging power grid is struggling to support the digital expansion, and frequent power outages are occurring even in tech hubs like Silicon Valley. The Trump administration is pushing for increased investment in upgrading the power grid, but resolving the issue in the short term is unlikely. The demand for high-capacity electrical systems from large-scale data center construction is placing a significant strain on grid operations. In response, the U.S. government is pursuing policies to strengthen energy efficiency standards for data centers and promote the use of renewable energy. However, the data center industry fears that these regulations could stifle innovation and weaken competitiveness. Discussions are underway within the U.S. regarding data center location, with suggestions to distribute data centers to regions with more stable power supplies.
Amidst this situation, South Korean companies like LS ELECTRIC and Hyosung Heavy Industries are seeking opportunities in the overseas market by securing orders for ultra-high-voltage transformers. LS ELECTRIC has signed a ₩170 billion contract to supply ultra-high-voltage transformers to renewable energy facilities in the western United States, with component manufacturing in South Korea and shipments scheduled to begin in 2027. Hyosung Heavy Industries has also recently secured a ₩264.1 billion order for ultra-high-voltage transformers, demonstrating its competitiveness in the international market. LS ELECTRIC's North American sales increased from 13% of total sales in the first quarter of 2023 to 24% in the same period this year, continuing its growth in overseas markets. This demonstrates that South Korean companies are being recognized for their technological capabilities in the global market and highlights the growth potential of overseas power grid markets. However, these companies must also prepare for increased competition in overseas markets and fluctuations in exchange rates.
The power shortages caused by AI development and increased data center construction pose a challenging problem that is difficult to solve in the short term. However, a gradual solution can be found through technological development to increase energy efficiency, expanded use of renewable energy, and increased investment in power grid infrastructure improvements. Strengthening regulations on data center construction and considering regional power supply conditions when selecting locations are also important tasks. South Korean President Jae-myung Lee is actively working to resolve this issue and is collaborating with related companies to find ways to build a sustainable AI ecosystem. U.S. President Donald Trump is also expected to review energy policy directions and pursue policies to improve the energy efficiency of data centers. International cooperation to address energy issues will become increasingly important as AI technology advances.
