Solar, gas, and batteries race to power AI revolution

Bloomberg Intelligence

September 12, 2024

Spurred by spending on generative AI, data-center electricity use is poised to surge 4-10x by 2030, we calculate, likely driving demand for solar plus battery storage and natural gas generation, given the relatively short time frames to build such technologies vs. other power sources like nuclear. First Solar, Enphase, Sunnova and rivals could see sales accelerate due to AI spending, with our analysis showing combined 2026 revenue may approach $40 billion for US-listed solar peers, exceeding consensus of $30 billion. Kinder Morgan and Williams are among natural gas pipeline operators that may increase sales to generators. Gen-AI spending also could boost renewable capacity growth and earnings on both sides of the Atlantic for RWE, EDP and other European peers.

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Key takeaways

  • Power Demand to Surge: Nvidia’s Blackwell GPU launch could drive a 1% gain in total US power consumption (or a 50% increase in data-center use) in the first year of its release, we calculate. After decades of stagnant demand, we believe data centers could spur significant growth in the coming years and consume up to 17% of total US electricity by 2030.
Generative AI spending
  • Clean Energy Likely Paves the Way: US electric power-capacity additions are dominated by solar, wind and batteries (94% of the planned 2024 total), which will likely play a pivotal role in meeting new demand while offsetting declines in coal and other older technologies.
  • Utilities Set to Return to Growth: The boom in data centers to power AI, along with growing demand from economic development and electrification, could produce higher margins for nonregulated power, including Constellation, Vistra and NextEra’s renewables unit. Renewables’ earnings for European peers, including Engie, Orsted and RWE, may expand by mid- to high-single digits in 2024-30.
  • Gas Expansion Opportunity: Data centers could propel US natural gas demand by at least 3 billion cubic feet (bcf) a day, with upside potential for 10-plus bcf a day in 2030. Kinder Morgan, Energy Transfer, Williams and TC Energy may be the largest beneficiaries in the midstream sector given their vast networks near data-center hubs in Texas and Virginia.
  • Nuclear May Miss AI Revolution: With an expected 10-year buildout, NuScale, TerraPower and other companies racing to build next-generation nuclear reactors likely won’t be ready in time for the current wave of energy demand being driven by spending on generative AI.
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