Tech corporations and data center developers are projected to maintain significant reliance on fossil fuels, including 370 gigawatts of natural gas and 110 gigawatts of coal, even as solar power becomes the most economically viable energy source by 2035, according to a new report from BloombergNEF. This continued demand for fossil fuels is driven by the energy needs of artificial intelligence and the electrification of industries, ensuring the persistence of carbon-intensive energy production for decades.
Capital's New Demands
The BloombergNEF report indicates that the surge in energy demand from AI and industrial electrification is occurring concurrently with the expansion of solar power. Data centers alone are expected to drive an additional 1 terawatt of utility-scale solar, 400 gigawatts of solar, 370 gigawatts of natural gas, and 110 gigawatts of coal. Because gas and coal can operate continuously, BloombergNEF projects these fossil fuels will supply 51% of the incremental generation for data centers by 2050. The report explicitly states that tech companies and data center developers will wield an “outsized influence” over which energy sources remain viable through mid-century, underscoring capital's direct control over energy infrastructure.
The Market's Limits
Solar power is described as “too cheap to ignore” and is expected to surpass coal, oil, and natural gas as the largest power source in the next decade, purely on economic grounds. Matthias Kimmel, head of energy economics at BloombergNEF, stated, “Solar is winning the race.” This cost advantage is projected to deepen, with solar prices expected to drop another 30% by 2035, outcompeting coal and natural gas. By 2050, solar panels are expected to generate more than twice as much electricity as natural gas. However, this abundance also creates new avenues for surplus extraction; in Spain and Italy, standalone solar farms are no longer profitable due to a surplus of solar power driving down daytime electricity prices. Developers have responded by constructing hybrid renewable power plants that pair solar panels with batteries to exploit higher evening prices, ensuring continued profit margins. The report notes that companies from Redwood Materials to Ford have launched energy storage businesses to “capitalize on the trend” of grid-scale battery growth, which saw 112 gigawatts installed worldwide last year and is expected to nearly triple by 2035.
The State's Role in Capital Accumulation
The dramatic decline in solar costs is attributed to China’s industrial policy, which has actively supported the technology through manufacturer subsidies and market flooding, alongside mass manufacturing. Kimmel noted that “costs fall with every doubling of installed capacity,” and for solar, this has occurred even faster. Despite the economic viability of solar, the BloombergNEF report outlines two scenarios for decarbonization: an “economic transition scenario” driven by market forces (dollars and cents) and a “net-zero scenario” driven by regulations. While the economic transition scenario would reduce reliance on foreign energy, it implicitly accepts continued fossil fuel use, particularly for data centers. Only the net-zero scenario, which requires state intervention through regulations, would enable countries to “virtually eliminate” their reliance on energy imports, highlighting the limitations of market-driven solutions in achieving fundamental structural change. The report also acknowledged that it “was missing the Iran War,” which began during its production process, a significant omission that underscores the narrow, market-centric lens through which such analyses often view global energy dynamics, overlooking geopolitical conflicts that directly impact energy supply and prices, as seen in Pakistan's solar expansion after natural gas price spikes following Russia’s invasion of Ukraine.