Solar power to become world’s top electricity source within a decade, BloombergNEF says
BloombergNEF predicts solar power will surpass fossil fuels as the largest electricity source within the next decade, driven by falling costs and surging AI and data center demand.
Forecast: solar overtakes fossil fuels by the 2030s
BloombergNEF’s new analysis concludes that solar power will become the world’s largest source of electricity within the next decade, outpacing coal, oil and natural gas on purely economic grounds. The consultancy attributes the projected shift to continuing declines in module and project costs that make solar increasingly the lowest-cost option for new generation.
The report warns that the timing could accelerate if governments adopt more aggressive emissions policies, while conversely slower policy action or supply constraints could delay the handoff. BloombergNEF’s energy-economics lead emphasized that economics alone are already favoring solar in many markets.
Data centers and AI: the demand engine
A major driver of the anticipated build-out is rising electricity demand from data centers and AI infrastructure, which BloombergNEF expects to prompt substantial new capacity investments. The firm models roughly an extra terawatt of utility-scale solar and several hundred gigawatts of additional generation additions linked to data center growth over coming decades.
Because some fossil fuels can deliver continuous 24/7 output, the consultancy still projects natural gas and coal will supply a significant share of incremental generation for high-availability loads through mid-century. That dynamic gives large technology firms and data center developers outsized influence over which energy sources persist.
Why solar’s economics are dominant
Two structural forces have driven solar’s rapid cost declines: large-scale manufacturing efficiencies and concentrated industrial support, particularly from Chinese producers. Those factors have repeatedly cut per-unit costs as global capacity doubled, and BloombergNEF expects further declines—projecting prices to fall another roughly 30 percent by 2035.
The report notes that falling capital and module costs make solar the default choice for new power in many regions, with long-term forecasts suggesting solar could produce more than twice as much electricity as natural gas by 2050. That trajectory is rooted in both technology learning curves and the economies of scale in manufacturing and deployment.
Storage, geothermal and nuclear vie for roles
BloombergNEF’s outlook acknowledges that alternatives such as long-duration storage, geothermal and advanced nuclear could reshape the mix. Recent commercial moves — including large purchases of long-duration battery systems for data center projects and high-profile public offerings by geothermal and advanced nuclear firms — indicate growing market interest beyond photovoltaics.
Grid-scale batteries are already advancing rapidly; the consultancy reported roughly 112 gigawatts of grid-scale storage installed last year and expects that figure to nearly triple by 2035. Developers increasingly pair solar with storage in hybrid plants to capture value across daily price cycles and to provide dispatchable capacity when sunlight wanes.
Regional examples and supply implications
Real-world developments illustrated by BloombergNEF’s analysis include rapid solar rollouts in countries that have shifted away from costly fossil fuels. For instance, after natural gas prices spiked, Pakistan added large amounts of solar capacity within a two-year window. That case underscores how market signals can accelerate adoption when renewables are economically preferable.
However, the report also shows varied regional outcomes depending on policy and resource endowments. In markets with deep fossil-fuel infrastructure or limited grid flexibility, gas and coal may remain central for balancing needs unless complemented by large-scale storage and other dispatchable low-carbon options.
Energy independence and geopolitical scenarios
BloombergNEF modeled scenarios to test effects on countries’ reliance on imported energy, including an economic-transition pathway driven largely by market forces and a stricter net-zero regulatory pathway. Under the market-driven transition, most countries reduce import dependence; under the net-zero scenario, the modelling suggests nations could substantially eliminate reliance on foreign energy sources.
The consultancy noted it did not fully incorporate the potential impacts of recent geopolitical events that emerged late in its analysis timeline, leaving scope for future revisions. Still, the overarching message is that a transition toward more domestic, renewable resources can enhance energy independence while meeting demand growth.
Looking ahead, the interaction between rapidly falling solar costs, expanding storage deployments, and the enormous electricity appetite of AI and data center infrastructure will shape investment and policy decisions. Investors and grid operators will need to balance the economics of cheap daytime solar with the technical and capacity requirements of a 24/7 digital economy.
The energy transition that BloombergNEF outlines hinges on continued cost declines, support for grid flexibility, and decisions by major energy consumers; together, those factors will determine how quickly solar power becomes the predominant source of electricity worldwide.
