China’s cloud market to drive surging energy consumption through 2023: study

Electricity consumption from China’s data center industry is projected to surge 66% over the next five years, according to a new study by environmental organization Greenpeace.

Why it matters: The rapidly growing market is largely driven by data-intensive industries such as cloud computing, an industry that the government has marked for rapid development as it ramps up the country’s artificial intelligence (AI) capabilities. China is aiming to close the AI technology gap with the US by 2030.

• Coal-generated power helped fuel China’s remarkable economic expansion over the past few decades. However, the power market has made some headway in renewable energy sources like wind and solar, creating opportunities for the country’s booming data center industry to procure clean energy and reduce reliance on fossil fuels.

Details: Coal provides 73% of the power consumed by data centers, according to the study published on Monday by Greenpeace and the North China Electric Power University.

• Last year, carbon emissions from China’s data center industry amounted to 99 million tons. According to the study, if the data center sector’s renewable energy intake increases to 30% over the next five years from 23% in 2018, 16 million tons of carbon emissions would be avoided.
• The industry is expected to consume more electricity by 2023 than Australia’s total consumption in 2018. Greenpeace is calling for the industry to lead the country’s energy transition from heavy reliance on coal to renewable energy.

Context: This is the first Greenpeace study focused specifically on data centers in China.

• China is on its way to becoming one of the largest cloud markets. No foreign cloud provider is allowed to operate its own data centers in China, which means domestic cloud providers like Alibaba Cloud are major energy consumers.
• China’s reliance on coal is set to decline with the state backing renewable energy sources. China’s top economic planning body established targets for renewable energy, increasing the share of non-fossil fuel energy to 20% by 2030.