Are renewables the best way to provide cheap and reliable energy for growing AI needs?
Recently, I found it interesting to compare UK and US policies by looking at two Financial Times articles published at roughly the same time:
Donald Trump’s attacks on renewables sector quash nearly $19bn worth of projects
UK green power surges with record approvals for new renewable energy capacity
The first article focuses on criticism of the US administration’s decision to cut investments in new renewable projects while simultaneously trying to ensure the availability of cheap energy for the growing AI industry. According to the article, clean energy projects worth $18.6bn have been cancelled this year, compared with just $827mn in 2024, based on data from Atlas Public Policy’s Clean Economy Tracker. Investment announcements also fell by nearly 20%, to $15.8bn this year, down from $20.9bn in the same period of 2024. The article stresses that while demand for energy to power the AI boom will continue to rise, the US risks permanently damaging its renewables sector, which often provides the cheapest and fastest energy source to deploy.
The UK-focused article, in contrast, praises the government’s efforts to support renewable energy growth. More than 16.1 gigawatts of renewable energy capacity received planning permission in the second quarter of this year, representing 195% growth compared with the same quarter last year.
However, the claim that renewables are paving the way to abundant cheap energy is questionable when examined against actual figures. Retail electricity costs in the UK are the highest in Europe. In 2024, the average residential electricity price in the UK was around £0.303 per kWh (€0.404 per kWh), compared with an EU average of €0.289 per kWh (including taxes and levies). Among EU countries, only Germany has reached similarly high retail electricity prices. Both the UK and Germany are among countries with the highest shares of renewables in their energy mix. A similar pattern can be seen in the US: California, the state most advanced in renewable deployment, also has the highest residential electricity prices. Clearly, the relationship between renewable energy and low-cost electricity is far from straightforward.
As Advait Arun, an energy policy analyst at the Center for Public Enterprise, told the FT: “Renewables can be built and connected in a matter of a year or two, in a way that meets data center developers’ timelines. If you’re ignoring renewables, then you’re missing a key part of the equation.”
He may be right about timeliness, but there are many other factors at play. The demand for electricity from AI-driven applications is enormous and will only increase. Access to low-cost energy is a matter of competitive advantage for countries, especially for the US, which is competing with China in the technology sector. For this reason, a spokesperson from the Department of Energy told the FT that the US needs to “leverage all forms of energy that are affordable, reliable and secure to ensure the United States is able to win the AI race and reindustrialize.”
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