Office Hours: Understanding AI’s Impact on Sustainable Energy

As artificial intelligence accelerates across industries, concerns are growing about its environmental impact — and particularly, the electricity required to power data centers. Critics warn that the AI surge could strain renewable energy supplies and push the grid back toward fossil fuels.

Safak Yucel, associate professor of operations and associate director at the Business of Sustainability Initiative, explains why popular narratives about AI and energy can be misleading and why renewable energy remains a key part of a resilient, affordable grid.

Will AI and data centers dramatically increase global energy demand — and can that demand only be met by conventional energy?

A common assumption is that electricity demand will increase due to greater AI usage and that this demand can only be satisfied by conventional sources. Both of these claims are actually incorrect. 

Yes, there will be more AI use, but AI is also becoming much more efficient in terms of electricity and water use. Greater AI use may not translate into significantly higher electricity demand. And even if increased AI use leads to higher electricity demand, that demand can also be satisfied by tools like solar, wind, and batteries.

The idea that renewables are doomed because AI usage is increasing is a faulty conclusion. To reach that conclusion, there are two intermediate steps: more AI means endlessly more electricity demand, which is, by itself, is probably not true; and second, this higher electricity need can only be satisfied through conventional energy sources and not renewables, which also is faulty.

How are AI technologies becoming more energy efficient?

Once we input a prompt on ChatGPT and ask for a response, it runs an algorithm in the background. With advances in basic sciences like statistics and optimization, these algorithms can provide better responses with less computational need. As a result, there is going to be less electricity use per request. In fact, Google reported that emissions for Gemini dropped by a factor of 44 over one year. As the basic science behind these algorithms improves, there is going to be less energy consumption.

Why is electricity different from other commodities?

Most physical commodities — food, electronics, household items — can be produced in advance and stored as inventory. For example, if you’re thinking about purchasing a laptop, Apple doesn’t have to produce that laptop at the precise time you go to an Apple Store and request a product; Apple can produce those laptops months in advance and put them into stock. 

Electricity is different because it cannot be stored at scale. Every time somebody flips a switch, turns on their AC, turns on their TV, they need electricity. As a result, we need to produce precisely the same amount demanded at every moment. There are many engineering challenges behind this, but the key challenge is that there is no inventory, and demand and supply need to be balanced in real time.

How can renewable energy help offset the electricity demand?

Electricity is a different commodity because demand and supply must be in near-perfect balance virtually 24/7, 365 days a year. The wind doesn’t blow all the time and the sun doesn’t shine all the time, but when they do, it is free. Over the past decade, there have been significant investments in renewables across the United States. As a society, we would lose a big opportunity if we were to transition away from renewables just because the sun doesn’t shine all the time.

What are some of the cost benefits of renewable energy?

Over the last decade, the share of coal in the U.S. electricity grid went from 40% to about 14%, and the share of renewables jumped from 10% to about 23%. The reason we have replaced coal mostly with renewables and natural gas is that coal is just too expensive. Over years and years of investments in renewables, costs have become significantly lower. On a purely cost-basis, it’s difficult to say that renewables don’t make sense. As a result, we’ve seen these outsized investments into wind and divestment from coal.

Can you talk through some solutions other than renewable energy?

The primary way to make supply more flexible would be to invest more in batteries because we can simply charge them with the very low-cost electricity we generate during sunlight hours with solar. We would use the electricity stored in the batteries at other times when solar may not provide sufficient electricity. Another solution is conventional sources. We will likely end up with renewables paired with some traditional sources in the future, so whenever the wind doesn’t blow and the sun doesn’t shine, we can increase the output from these conventional sources to meet demand. When the wind starts blowing and the sun starts shining again, we can reduce the amount of electricity we draw from these conventional sources. 

Why does this conversation matter?

Energy affordability is the main reason. If we make the mistake and take the claim that growth in AI precludes investments into wind and solar, we will end up investing in other energy sources that are intrinsically more expensive to generate electricity from, which will result in higher energy prices for the U.S. consumer. This is absolutely important because higher energy prices mean higher prices for every single item. Energy is the primary commodity and requirement for virtually any product or service that our economy produces.