Solar to dominate energy by 2035, but AI data centers will keep fossil fuels in business
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Why is solar expected to become the largest power source by 2035?
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Solar will become the largest source of power in the next decade, surpassing coal, oil, and natural gas. That's according to a new report from Bloomberg NEF. The tectonic shift will occur alongside a historic rise in the use of energy driven by AI and the electrification of entire industries.
How will AI‑driven data centers influence the future mix of fossil fuels and renewables?
Matthias Kimmel, head of energy economics at Bloomberg NEF, told TechCrunch, Solar is winning the race. Now Bloomberg NEF expects the shift to happen on economic grounds alone. Solar is simply too cheap to ignore. Pakistan, for example, has added 25 gigawatts of solar power in the last two years after natural gas prices spiked following Russia's invasion of Ukraine. The transition could be even swifter if countries take more aggressive measures to curb their carbon emissions. The power handoff comes as investors are viewing energy as one of the biggest opportunities for growth in recent decades. Data centers have been at the center of the obsession, and Bloomberg NEF's data reinforces the scale of the opportunity.
The energy consultancy expects data centers to drive an additional one terawatt of utility scale, 400 gigawatts of solar, 370 gigawatts of natural gas. and 110 gigawatts of coal. But because of gas and coal's ability to operate twenty four seven, Bloomberg NEF expects those fossil fuels to provide fifty one percent of incremental generation for data centers by twenty fifty.
What factors are driving the rapid decline in solar panel costs?
Put simply, tech companies and data center developers will have an outsized influence over which energy sources remain viable by mid-century. Now, those forecasts are not ironclad. Other technologies have been vying for a piece of the data center market, including long-duration energy storage, geothermal, and nuclear. Big batteries received a boost from Google, which has included explored one billion dollars worth of one hundred hour batteries from Form Energy in a recent data center project, and both geothermal and nuclear power show promise following the blockbuster IPOs of both Fervo Energy and X Energy this month. Competition from photovoltaics will be stiff though. Solar panels have spread dramatically in recent years, spurred by declining costs that show no sign of stopping.
By 2035, prices are expected to drop another 30%, out competing coal and natural gas. By 2050, solar panels are expected to generate more than twice as much electricity as natural gas. Solar's falling costs can be attributed to two causes.
How are hybrid solar‑battery projects reshaping grid economics in Europe?
One is China's industrial policy, which has favored the technology, subsidizing manufacturers and flooding the market. The other is mass manufacturing, which has helped wring costs out of solar at a remarkable pace. Kimmel said, generally costs fall with every doubling of installed capacity. In the case of solar, it has gone even faster than that. Solar's abundance is starting to push grid scale batteries down the same path. In Spain and Italy, standalone solar farms are no longer profitable because a surplus of solar power has driven down daytime electricity prices. In response, developers have started building so-called hybrid renewable power plants, which pair solar panels with batteries to take advantage of higher evening prices.
The current state of the battery market is akin to where solar was in 2020, according to Bloomberg NEF. Last year, 112 gigawatts of grid scale batteries were installed worldwide. By twenty thirty five, the company expects that figure to nearly triple.
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Chapters
5 chapters
1
Why is solar expected to become the largest power source by 2035?
0:02–1:05
2
How will AI‑driven data centers influence the future mix of fossil fuels and renewables?
1:05–2:20
3
What factors are driving the rapid decline in solar panel costs?
2:20–3:31
4
How are hybrid solar‑battery projects reshaping grid economics in Europe?
3:31–4:37
5
What do Bloomberg NEF’s economic‑vs‑regulatory scenarios mean for global energy independence?
4:37–5:37
Speakers
2 identifiedMore from TechCrunch Industry News
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