The energy production of AI systems, not computing power, is the key bottleneck in advancing the technology, according to a report by the International Energy Agency (IEA) and the Future of Management Initiative at Barcelona’s IESE Business School. The article suggests that the energy production, rather than the power capacity for AI, is a physical issue, as well as the training of AI models. The IEA predicts that data centers will consume more than twice as much electricity by the end of the decade, reaching levels similar to those in major industrial economies. The main issue is timing as large AI campuses grow faster than grid upgrades or government approvals can keep up with, creating a shortage of energy supply. However, the IEA believes that the shortage of electricity is more about local bottlenecks created by the rapid deployment of large data centres rather than global shortages. The industry is scrambling to address this issue.