AI data centers to sustain fossil fuel demand through 2050

Solar power is poised to become the largest source of power worldwide in the next decade, surpassing coal, oil, and natural gas. However, the massive energy requirements of artificial intelligence data centers mean fossil fuels will remain critical. According to a new report from BloombergNEF, fossil fuels are expected to provide 51% of incremental generation for data centers by 2050. “Solar is winning the race,” said Matthias Kimmel, head of energy economics at BloombergNEF.

This shift comes as data centers drive a massive surge in utility-scale solar (large-scale solar installations) and other power sources. BloombergNEF projects that data centers will require an additional 1 terawatt of utility-scale solar. The energy breakdown driven by these facilities includes:

• 400 gigawatts of solar
• 370 gigawatts of natural gas
• 110 gigawatts of coal

While solar prices are expected to drop another 30% by 2035, the market is also seeing growth in storage. Last year, 112 gigawatts of grid-scale batteries were installed worldwide. In Spain and Italy, developers are building hybrid renewable power plants that pair solar panels with batteries. Tech companies are also investing in long-duration energy storage (technologies capable of storing energy for extended periods). For instance, Google has backed a project featuring $1 billion worth of 100-hour batteries from manufacturer Form Energy. Other entities in the broader energy ecosystem include geothermal energy provider Fervo Energy, nuclear power provider X-energy, and energy storage businesses Redwood Materials and Ford. Kimmel noted that solar costs fall with every doubling of installed capacity, a trend that is now pushing grid-scale batteries down a similar path.

The transition is also reshaping energy independence. Following Russia’s invasion of Ukraine, which caused natural gas prices to spike, Pakistan added 25 gigawatts of solar power in the last two years. BloombergNEF’s analysis suggests that a transition driven by economics would allow every country to reduce its reliance on foreign energy imports, including oil exporter Saudi Arabia. Kimmel noted that this cost-efficient transition is ultimately beneficial for energy independence.

Why it matters

While solar power is rapidly falling in cost, the massive power requirements of AI data centers create a persistent floor for fossil fuel demand, complicating the path to net-zero.