Solar Power Growth in 2024 Offset by Increased Natural Gas Use

Record Energy Transition Investment Falls Short of Emissions Reduction

A substantial $338 billion was invested in the energy transition within the United States last year, as detailed in a recent report. However, this unprecedented level of investment proved insufficient to achieve a reduction in the nation’s overall carbon emissions.

Solar Energy Leads Capacity Additions

Solar power spearheaded the expansion of electrical generating capacity, contributing 49 gigawatts of new capacity in 2024. This figure significantly surpassed that of any other energy technology.

Combined, solar and wind energy now fulfill almost a quarter of the country’s electricity needs and represent close to 10% of total energy consumption, according to the report released on Thursday by BloombergNEF and the Business Council for Sustainable Energy.

Natural Gas Demand Impacts Emissions

Concurrently, the demand for natural gas experienced a 1.3% increase. This rise was enough to cause a slight increase – approximately half a percent – in U.S. carbon emissions.

The primary drivers of this uptick were industrial consumers and power generation facilities utilizing natural gas for electricity and heating purposes.

A Critical Juncture for U.S. Emissions

This report arrives at a pivotal moment for the U.S., as the nation stands at a crucial decision point.

Since 2005, U.S. carbon emissions have decreased by nearly 16%, with power-related emissions declining by over 40% during the same timeframe.

Furthermore, the U.S. has enhanced its energy productivity, achieving 2.3% greater economic output last year for each unit of energy consumed.

Projected Electricity Demand Growth

Despite these gains, forecasts predict a substantial increase in electricity demand in the coming years.

A report from Grid Strategies indicates that U.S. electricity consumption could rise by as much as 15.8% by 2029. The source of this additional electricity will significantly influence the country’s long-term climate impact.

Data Centers Drive Demand

The primary catalyst for this surge in electricity demand is the rapidly growing need from data centers.

Technology companies are making substantial investments in large-scale data centers to support cloud computing operations and the development of artificial intelligence (AI). The rate of expansion is such that, by 2027, half of all new AI servers may be operating below optimal power levels.

Tech Companies Invest in Nuclear Power

These projections have prompted tech companies to secure future power supplies.

Microsoft, Google, and Amazon have all announced significant investments in nuclear power, supporting companies like Kairos and X-Energy, and also exploring the revitalization of existing nuclear reactors. Nuclear power does not produce direct carbon dioxide or greenhouse gas emissions.

Renewable Energy Expansion Continues

Alongside nuclear investments, these companies are also expanding their renewable energy portfolios.

This year, Amazon has secured agreements for an additional 476 megawatts of renewable energy to meet the demands of its data centers. Meta has also entered into agreements for 200 megawatts and 595 megawatts of renewable energy.

These deals are largely focused on solar energy, mirroring the national trend. This is due to the technology’s affordability and the speed with which new solar farms can be brought online, factors that are crucial for power-intensive tech companies.

Improving Energy Efficiency

Enhancing energy efficiency could provide further benefits to tech companies by maximizing the use of existing grid capacity.

A recent study suggests that optimizing computing tasks – scheduling them during periods of lower demand or relocating them to regions with greater capacity – could unlock 76 gigawatts of additional capacity in the U.S. This represents approximately 10% of peak national power demand.

Global Competition and Investment

Such innovative approaches may be necessary for the U.S. to remain competitive on a global scale.

Despite record investments in the energy transition, the U.S. still trails China in capital deployment. While the U.S. allocated 1.3% of its GDP to the transition last year, China invested 4.4%.