Contrary to the renewables-focused narrative, the massive, stable energy needs of AI data centers are increasing reliance on natural gas. Underinvestment in grid infrastructure makes gas a critical balancing fuel, now expected to meet a fifth of the world's new power demand (excluding China).
The AI boom is not a universal positive for all energy sources. The need for a resilient, 24/7 power grid for AI data centers increases reliance on stable fossil fuels and battery storage to balance the intermittency of renewables. This dynamic is creating rising costs for pure-play solar and wind producers.
Soaring power consumption from AI is widening the "power spread"—the difference between the cost to generate electricity and its selling price. This projected 15% expansion in profit margins will significantly boost earnings for power generation companies, creating massive value across the supply chain.