Air conditioning and AI demanding more of world’s power—renewables can’t keep up

In the U.S., the new driver is energy-guzzling artificial intelligence. Demand was already on the rise to power electric vehicles, heat pumps and other devices designed to reduce fossil fuel use.

In the developing world, the boom is driven by industrialization and basics like lights and air conditioning. That means more fossil fuels, including coal, the worst emissions offender.

“The reality is we can keep adding renewables until we’re blue in the face and it won’t be enough," said Sumant Sinha, chief executive of ReNew, one of India’s biggest renewable energy companies.

Here’s the state of play.

A new era

America’s power-sector emissions have declined as natural gas and renewables supplanted coal. But renewable electricity that is soaked up by new drivers of demand can’t be used to clean up polluting sectors such as transportation and industry.

Factories producing microchips, electric vehicles and batteries are fueling demand growth. That shows little sign of slowing. Samsung will more than double its semiconductor investment in Texas to $44 billion, The Wall Street Journal reported this month.

The wild card is AI, which uses more energy than conventional computing.

Precise data on AI’s power usage is scant, and it isn’t clear how the technology will evolve. But a 2023 paper by data scientist Alex de Vries estimated that AI servers worldwide could use about as much power as a midsize economy such as the Philippines or Sweden by 2027.

In the U.S., with the most data centers, their share of electricity consumption could rise from 4% in 2022 to 6% in 2026, the International Energy Agency says.

AI could add 8% to U.S. natural-gas demand by 2030, according to research firm Thunder Said Energy, with backup generators burning more diesel too.

“I think we’re going to need every little bit of renewables and natural gas we possibly can," Murray Auchincloss, chief executive of oil major BP, said of the growth of AI on a recent earnings call.

In Asia, renewables can’t keep up

China installed more solar panels last year than the U.S. ever has, and India plans to more than triple renewables in the next six years. That growth hasn’t kept pace with demand, leaving coal to close the gap.

With its big build-out last year, China did cross an important threshold—growth of renewables exceeded the long-term growth of power demand, according to Lauri Myllyvirta, a senior fellow at the Asia Society Policy Institute.

But 2023 was an unusual year. Beijing was trying to stimulate the economy via exports, so the manufacturing sector used more electricity, and a heat wave meant more air conditioning. Power demand stayed one step ahead of renewables.

Everyone is watching China because it is trying to address renewables’ reliability problem with grid upgrades, batteries and hydropower. The goal is to go green while keeping power prices low.

“If China succeeds in doing that, that could be replicated in other markets like India and Southeast Asia," said Alex Whitworth, head of Asia Pacific power research at Wood Mackenzie.

India encapsulates the challenge. Power-demand growth has been running above 8% a year, outpacing gross domestic product growth, as industrial activity explodes.

Hundreds of millions of Indians whose homes have been connected to the grid this century are also buying appliances. By 2050, Indians’ air conditioners could use more power than Africa currently consumes, the International Energy Agency says.

The government’s renewables push is part of a broader effort to keep up with demand. India has 30 gigawatts of coal plants under construction, with more in the pipeline, according to Global Energy Monitor.

Moving coal to power plants is straining India’s infrastructure. The government said last year it envisions adding 100,000 railcars to India’s congested railroads by 2030—a fourth of the existing stock—just for coal.

To slow the coal rush, the government would have to coax private investors to fund grid improvements and nurture a green manufacturing sector to compete with the wealth created by coal, said Karthik Ganesan, a power-market expert at India’s nonprofit Council on Energy, Environment and Water.

“If anybody was expecting India’s coal to peak anywhere before the mid-2030s, they were probably unrealistic," he said.

Andrew Barnett contributed to this article.

Write to Ed Ballard at ed.ballard@wsj.com