Solar will become the largest source of power in the next decade, surpassing coal, oil and natural gas, according to a new report from BloombergNEF. But the same report says the AI boom and the electrification of entire industries are creating a new demand machine that will keep gas and coal in the mix, with tech companies and data center developers gaining outsized influence over which energy sources remain viable by mid-century.
Who Gets to Shape the Grid
Matthias Kimmel, head of energy economics at BloombergNEF, said, “Solar is winning the race.” The report says the shift is expected to happen on economic grounds alone, with solar described as too cheap to ignore. That is the language of the market, but the power behind it is still concentrated in the hands of tech firms, developers, and energy giants deciding what gets built and what gets locked in.
BloombergNEF said data centers will 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 24/7, BloombergNEF expects those fossil fuels to provide 51% of incremental generation for data centers by 2050. In other words, the digital infrastructure sold as the future is still leaning on the dirtiest machinery of the old order to keep the servers humming.
The report said tech companies and data center developers will have an outsized influence over which energy sources remain viable by mid-century. That means the people and communities living with the consequences of energy decisions are not the ones making them; the apparatus is being shaped by corporate demand, not public need.
The Costs Land Below
BloombergNEF said Pakistan has added 25 gigawatts of solar power in the last two years after natural gas prices spiked following Russia’s invasion of Ukraine. The report said the transition could be even swifter if countries take more aggressive measures to curb their carbon emissions. But the same report makes clear that the pace of change is being driven by price shocks and industrial demand, not by any meaningful surrender of power from above.
Competition from photovoltaics is expected to remain stiff. By 2035, prices are expected to drop another 30%, outcompeting coal and natural gas. By 2050, solar panels are expected to generate more than twice as much electricity as natural gas. BloombergNEF said solar’s falling costs are being driven by China’s industrial policy, which has favored the technology by subsidizing manufacturers and flooding the market, and by mass manufacturing, which has helped reduce costs at a remarkable pace.
Kimmel said, “costs fall with every doubling of of installed capacity,” adding, “In the case of solar, it has gone even faster than that.” The report frames this as a market story, but the facts point to a system where state-backed industrial policy, corporate scale, and global supply chains determine what becomes cheap enough to spread.
Batteries, Storage, and the Next Round of Capture
Solar’s abundance is also pushing 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, Kimmel said. Developers have responded by building hybrid renewable power plants that pair solar panels with batteries to take advantage of higher evening prices.
BloombergNEF said the current state of the battery market is similar to where solar was in 2020. Last year, 112 gigawatts of grid-scale batteries were installed worldwide. By 2035, BloombergNEF expects that figure to nearly triple. Companies from Redwood Materials to Ford have launched energy storage businesses to capitalize on the trend. The energy transition, in this telling, is also a fresh field for corporate capture.
Other technologies are 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 $1 billion worth of 100-hour batteries from Form Energy in a recent data center project. Geothermal and nuclear power also show promise following the blockbuster IPOs of Fervo Energy and X-energy this month. The report’s own language makes plain that the future grid is being fought over by firms with money, market access, and the ability to steer infrastructure toward their own needs.
The report also said it was missing the Iran War, which started when BloombergNEF was too far along in the process to make major changes. The team tested the effects of two scenarios on countries’ dependence on energy imports. Under the economic transition scenario, in which decarbonization is driven largely by dollars and cents rather than regulations, every country would reduce its reliance on foreign energy, including oil powerhouse Saudi Arabia. Under a net-zero scenario, in which regulations drive deeper decarbonization, every country would be able to virtually eliminate its reliance on energy imports.
Kimmel said, “The transition, which in many ways is cost efficient, is actually good for energy independence.” The report leaves the central contradiction intact: the grid may get cleaner, but the decisions remain concentrated at the top, where corporations, industrial policy, and state power decide what gets built, who profits, and who pays.