Fossil fuels have often been criticized for their environmental impact, yet they are currently viewed as a necessary "crutch" in the transition to renewable energy.As demand for energy in Europe has stalled, investment in renewables diminished, but the rise of artificial intelligence (AI) is predicted to inject new capital into the sector while also sustaining fossil fuel usage in the short term.
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cnbc.comThe International Energy Agency (IEA) forecasts a remarkable 60% increase in global electricity generation from renewable sources by 2030, which will account for 45% of total electricity output.
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cnbc.comThis shift is crucial, particularly as Europe has witnessed almost 50% of its power generation from renewables in 2024, driven primarily by solar and wind energy.
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cnbc.comgeoharvey.comHowever, the integration of these variable energy sources into established power markets presents challenges that could undermine investment economics.
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cnbc.comPeter Osbaldstone, a research director at Wood Mackenzie, emphasized the difficulties of integrating renewable energy into power markets, which can lead to price pressures that complicate investments in a decarbonized power mix.
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cnbc.comAs AI technologies develop, they are expected to increase demand for electricity, which may compel a reliance on fossil fuels to manage the immediate energy bottleneck.
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cnbc.comDespite the reliance on fossil fuels, experts agree that renewable energy is the long-term solution.Agate Freimane, a partner at Norrsken, stated, "Renewable energy is the only way to win in the long term." She noted that the cost of renewable energy has plummeted by over 90% in recent years, making it increasingly competitive compared to fossil fuels.
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cnbc.comIn fact, 91% of new renewable projects launched in 2024 were cheaper than their fossil fuel counterparts.
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cnbc.comThe interplay between AI and renewable energy could create a self-reinforcing cycle; as clean energy becomes cheaper, it accelerates electrification, which in turn boosts the demand for energy storage and grid intelligence.
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cnbc.comThis trend is expected to lower costs further, enhancing the overall efficiency of the energy system.
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cnbc.comHowever, intermittency remains a significant concern.Alberto Faraco, a senior analyst at Morningstar DBRS, pointed out that renewable energy's unpredictability necessitates comprehensive investment across the entire energy system, not just in generation.
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cnbc.comCurrent battery technologies and storage solutions are crucial for managing energy supply, but the development of these technologies is still in progress.
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cnbc.comGas is currently viewed as the most efficient transitional fossil fuel, likely to remain part of the energy mix until at least 2060, according to Wood Mackenzie.
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cnbc.comThis dependency complicates the transition toward a fully renewable energy grid, leading to discussions about how to phase out gas generation without compromising energy reliability.
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cnbc.comWhile nuclear energy could provide a stable baseload for renewables, its inability to respond flexibly to demand fluctuations limits its effectiveness in a renewable-dominated energy landscape.
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cnbc.comAs such, the transition strategy must consider both the current reliance on fossil fuels and the need for a sustainable long-term energy framework.
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cnbc.comIn summary, as AI technologies advance, they offer exciting prospects for enhancing the efficiency and integration of renewable energy sources.Nevertheless, the continued use of fossil fuels as a temporary solution reflects the complex dynamics at play in the global energy landscape.The successful transition to renewables will depend on balanced investments in both traditional and innovative energy solutions to ensure reliability and sustainability in the face of growing demand.
