Data Centers Are Reshaping the Energy Landscape – A Strategic Look at the Growing Connection Between Digital Infrastructure, Electricity and Sustainability

The digital revolution does not exist in a virtual space alone. It relies on energy-intensive physical infrastructure that affects power grid planning, investment in generation and storage, and the way countries prepare for economic and technological growth.

In recent years, data centers have become one of the most important infrastructures of the global economy. Cloud services, artificial intelligence, digital commerce, financial systems and modern communications all depend on facilities that operate continuously and enable the digital activity of the modern world.Behind this development, a profound transformation is also taking place in the energy sector. As demand for digital services grows, so does the need for stable, continuous and reliable electricity supply. Data centers are not only major energy consumers. They are becoming a factor that influences power system planning, infrastructure development and the pace of the transition to cleaner energy sources.

The expansion of cloud services and the rapid adoption of artificial intelligence applications are creating unprecedented demand for computing power. New data centers are being built to support growing volumes of information and increasing computational workloads, and this expansion translates directly into higher electricity consumption.

According to the International Energy Agency, data centers worldwide consumed approximately 485 terawatt-hours of electricity in 2025. The central forecast for 2030 stands at approximately 950 terawatt-hours, nearly double within five years and equivalent to around 3% of global electricity consumption. These figures demonstrate that data center energy consumption is no longer a narrow technological issue, but one with broad economic and infrastructure implications.

The impact of data centers extends far beyond rising electricity consumption. In practice, they are changing the way governments, energy companies and developers plan the entire system.

Decisions about where to locate facilities are influenced by electricity availability, grid capacity, supply reliability and the ability to expand infrastructure over time. Connecting large, continuous-load consumers may require expansion of transmission and distribution systems, additional generation capacity and the development of energy storage and backup solutions.

At the same time, these investments can improve regional infrastructure and create a foundation for additional growth. As a result, a direct connection is emerging between the development of the digital economy and the development of the energy sector.

The expansion of data centers is also taking place alongside the transition toward renewable energy consumption. Leading technology companies are setting emissions reduction targets and increasing their use of clean energy, making them an important driver of investment in renewable generation, energy storage and long-term power purchase agreements.

The key challenge is ensuring alignment between the continuous operation of a data center and the variable availability of renewable energy sources. Matching annual electricity consumption with renewable energy purchases does not guarantee that clean electricity will be available at every hour or in the same geographic area.

This requires integrated planning that connects growing demand with clean generation, storage and operational flexibility.
The connection between the digital and energy sectors is becoming increasingly important in Israel as well. The expansion of local cloud services, the development of new computing facilities and growing demand for AI-based services are increasing electricity consumption and the need for supporting infrastructure.

According to an estimate by the Israel Electricity Authority cited in the Bank of Israel Annual Report for 2025, data center electricity consumption accounted for approximately 0.5% of national electricity consumption in 2024 and could rise to between 5% and 7% by 2030.

This forecast depends on the pace at which projects are implemented and on the ability to develop the necessary electricity infrastructure in time.

For Israel, this means a growing need for integrated planning across computing infrastructure, electricity generation, grid capacity and energy storage. The ability to provide reliable and sustainable energy will affect not only the electricity sector, but also Israel’s competitiveness as a technology hub and as a destination for investment in digital infrastructure.

Case Study: Google’s Data Center in Hamina, Finland

Google’s data center in Hamina, Finland, demonstrates how digital infrastructure can be integrated into the local energy system rather than remaining only a consumer of electricity.

The site was developed on the grounds of a former paper mill and uses seawater for cooling. A system was later developed in cooperation with the local energy company, Haminan Energia, to recover heat generated by the data center and transfer it into the city’s district heating network.

According to a CapMan report published in May 2026, the first heat supply began in the fourth quarter of 2025, and the facility was inaugurated in May 2026. At full operation, it is expected to provide approximately 70% to 75% of the energy needs of the city’s district heating network, equivalent to the needs of around 2,000 apartments.

This figure represents a forecast for full operation rather than an annual measurement of savings already achieved.
The strategic significance is clear. When a data center is designed as part of a broader energy system, a byproduct of digital activity can be transformed into a valuable local resource.

At the same time, heat recovery does not eliminate the facility’s electricity consumption, and its feasibility depends on climate conditions, proximity to heat consumers and demand throughout the year.

The Finnish example presents an important model for consideration. A data center does not have to operate as an isolated facility. It can become part of broader urban and regional planning.

In Israel, where the climate is different and large-scale district heating networks are uncommon, adapted uses for waste heat should be explored, including applications in industry, agriculture or nearby facilities.

The central principle remains the same. Early integration between asset planning, energy needs and the local system can create additional economic and environmental value.

One of the most notable trends is the emerging perception of data centers as part of the energy system itself.

Beyond being large electricity consumers, they are increasingly being integrated into initiatives involving efficiency, storage, heat recovery and demand management.

This approach may help reduce the environmental impact of digital activity while improving the utilization of energy resources and increasing system flexibility.

Realizing this potential requires cooperation between technology companies, infrastructure developers, public authorities, energy companies and asset managers.

Early and coordinated planning makes it possible to identify constraints, develop appropriate solutions and allocate costs and benefits more effectively.

The rapid growth of data centers is not merely a technology story. It represents a structural shift affecting energy system planning, the scale of infrastructure investment and the transition to clean energy.

As the world becomes increasingly digital, the connection between computing power and energy availability will continue to grow.

In the coming years, data centers are expected to become one of the significant forces shaping the energy future of countries, cities and organizations.

The key challenge is not simply to supply more electricity, but to ensure that this growth is supported by a reliable, efficient and sustainable energy system.

Countries and organizations that learn to plan these two systems together, the digital system and the energy system, will be better positioned to turn an infrastructure challenge into a driver of innovation, investment and growth.