Solar Set to Lead Power Mix by 2035, But AI Demand Will Keep Gas and Coal Running

Solar will overtake coal, oil, and natural gas to become the world's largest power source by 2035, BloombergNEF projects — but the buildout is running headlong into a surge in AI electricity demand that will keep fossil fuel generators profitable well into mid-century. The numbers on solar are striking. U.S. installed capacity is forecast to reach 737.8 GW by 2035, more than triple the 231.4 GW online in 2024, with panel costs expected to fall another 30% over the decade. In Texas this year, the EIA projects solar generation in ERCOT will cross 78 billion kilowatt-hours, surpassing coal for the first time at 60 BkWh. Pakistan built 25 GW of solar in two years after gas price spikes made the economics unavoidable. That momentum, however, runs into a problem the grid was not designed for. Data center servers consumed an estimated 7% of U.S. commercial sector electricity in 2025, according to the EIA's April 2026 Annual Energy Outlook. By 2050, that share is projected to reach between 22% and 33%. Total server consumption alone is forecast at 446 to 818 BkWh by 2050 — a six- to eleven-fold increase from the 73 BkWh consumed in 2020. The IEA expects global data center demand to more than double between 2022 and 2026, driven almost entirely by AI workloads. Investors are already pricing in the baseload premium. Geothermal startup Fervo Energy began trading on May 13 after upsizing its IPO multiple times; shares closed 33% above the offer price, pushing its valuation above $10 billion. The pop reflects a market paying up for reliable, always-on generation — the one thing solar and wind cannot promise without storage capacity that does not yet exist at scale. BloombergNEF forecasts data centers will drive 1 terawatt of new utility-scale capacity through 2050, including 400 GW of solar. But the same analysis calls for 370 GW of new natural gas and 110 GW of coal, with fossil fuels supplying 51% of incremental data center generation over that period. Space cooling for data centers is up to 2.9 times as energy-intensive as standard commercial floorspace, per the EIA, and AI inference loads run around the clock. The interconnection queue makes the problem worse. Data centers go from groundbreak to live in 18 to 24 months. In parts of the U.S., getting a new grid connection takes three to seven years, according to Fitch Solutions' BMI unit. Battery storage faces the same bottleneck. The result is a demand curve that outruns the clean supply chain by years. The next signals to watch: PJM Interconnection demand forecasts for Northern Virginia's data center corridor, where summer peak loads are growing at 5.4% annually. The EIA's commercial sector electricity intensity data, which is expected to breach its 2003 historical peak in either 2031 or 2032 — the first reversal in nearly three decades. And natural gas forward curves in the Permian and Haynesville, where dry gas output hit a record 39 trillion cubic feet in 2025, up more than 4% year-on-year, with more capacity in the ground if prices justify it.