A Simple Look at Complex Energy Needs

As the world’s energy needs continue to grow, the shift to renewable sources of energy becomes more critical, but also more complicated. The rise of electric vehicles, the increasing power demands of AI, and the ongoing reliance on fossil fuels make the transition a delicate balancing act. In this blog, we take a closer look at how these factors shape our energy landscape and what steps can be taken to drive more sustainable solutions.

It seems that solving the world’s energy crisis boils down to one simple solution: stop using fossil fuels and convert to 100% renewable energy. This is the obvious, common-sense solution. Or is it? Given our planet’s complex energy needs, is a 100% shift to renewable energy feasible? Affordable? I set out to ask Grok questions to determine, in a hopefully responsible way, where we’re headed in the next 10 years regarding energy usage, and what that means for our way of life.

How much global electrical energy is supplied by renewable sources?

For the past few decades, we in the West have mostly been on the path of attempting to reduce reliance on fossil fuels, hoping to curb the effects of climate change. In 2023, about 30% of global energy production was supplied by renewable sources such as wind or solar. This number hasn’t changed much since the early 2000s, although the West’s switch from coal-supplied power generation to cleaner-burning natural gas has made small gains in terms of efficiency and CO2 emissions.

How much does renewable energy cost to produce electricity vs. fossil fuels?

One significant contribution in shifting away from fossil fuels is the advances made in solar, wind, and battery technologies. Technological advances have significantly lowered operational costs of renewable energy sources, which have a high investment threshold. Advancements brought the Levelized Cost of Electricity (LCOE) of utility–scale alternative energy sources more in line with traditional sources. LCOE is used to objectively compare the overall capital, operating, and fuel costs of power generation facilities.

Solar photovoltaics with battery backup have an LCOE range of $0.06-0.210 per kWh, onshore wind $0.033 – 0.133 per kWh, while natural gas remains between $0.05 and $0.70 kWh, depending on locality and market factors. (Prices from 2022.)

Advancements in alternative energy would not be possible without government subsidies due to the prohibitive capital costs typically required. Sources estimate that 2-3.8 trillion dollars have been spent since 2000 by governments, which have sponsored alternative energy fuel use and R&D.

What trends will affect global power consumption in the next 10 years?

Global demand is expected to rise 3-4% annually for the next decade, with 3.5 Tera-watthours expected in the next 3 years alone. The top factor increasing demand is electrification of transport and industry. Simply put, this means EVs of all kinds. Next, Data Centers and Digitalization – our drive to Cloud and AI requires astonishing amounts of processing power, residing in massive data centers. Another factor affecting consumption is needs from emerging markets. As Chinese, African, and Asian markets mature, more EVs, air–conditioners, and factories pop-up, driving up energy demand.

How much power do EV’s consume?

Switching to EVs is not a zero-sum game, as EVs generate more demand for electricity within already over-stretched grids. Average EVs, driven 15,000 miles per-year, consume 417 kWh monthly. To put this into perspective, the average U.S. household consumes 887 kWh per month, meaning a single EV adds approximately 47% to the overall energy usage of a single household.

Why does AI require so much power?

Artificial Intelligence requires specialized chips that use more energy, and training models are extremely energy intensive. Running models are less energy-expensive, but the cumulation of millions of models globally running is significant. While efficiencies will hopefully be incrementally attained, Jevon’s paradox hangs over our heads even with the future hope of lower-energy-using chips and quantum computing. Increased efficiency might lead to increased demand for AI, off-setting efficiency gains.

So, what do we do? Return to subsistence farming and live off-grid? Continuously pour trillions of government subsidies into advancing alternative energy? Rely on fossil fuels in midst of climate crisis to support the demands of society? In short, yes – all of it. There’s a range of other considerations, but these perhaps simplify the entire spectrum of possibilities.

I, for one, do not want to give up my way of life completely to return to lower-energy-usage days. I’m willing to grow gardens, use LED bulbs, have meatless Mondays, purchase an EV, and support energy research and advancements. I am not willing, however, to give up advancements made in AI and the potential AI offers humanity, even considering current exorbitant energy usage.

For instance, using AI, I was able to significantly reduce research time on this article. This is a small, personal example, but we know AI offers humanity tremendous promise in terms of medical research, human productivity, and model predictions – to name a few. We cannot afford to abandon this, or other technologies that improve societies. But we also cannot afford to ignore its impact on global energy demand, or other challenges that may come in the ensuing decades.

At Dimension Software, we specialize in empowering industries with intelligent solutions that optimize asset reliability, streamline operations, and drive smarter energy usage. Our product, Asset Intellect, aggregates, integrates, analyizes, and visualizes your operational and business information in a single platform. This reduces inefficiencies, minimizes energy waste, and enhances overall system performance for sustainable operations.