AI’s Energy Appetite

Global capital spending on energy is expected to rise by about 2% in real terms to $3.3 trillion in 2025.¹ About two-thirds of this investment is directed toward renewables, nuclear, grids, storage, low-emissions fuels, efficiency and electrification, roughly twice the amount of investment in oil, natural gas and coal. Despite the massive investments and technological advances in renewables over the past decade, fossil fuels today still account for approximately 70% of energy consumption—roughly the same as 30 years ago.²

Energy transitions historically have unfolded over very long periods. In addition to demand driven by global population growth and increasing economic activity—particularly in developing economies—the current surge in artificial intelligence is a significant new source of energy use, which we believe may further extend an already long and winding transition. Some forecasts suggest energy demand from data centers could quadruple within a decade, potentially making data centers the fourth largest source of consumption after China, the US and India.³

This enormous demand points to a continued need for greater supplies of both traditional and renewable forms of energy. Potential beneficiaries, in our view, include well positioned legacy energy businesses with scarce, vital assets such as major suppliers of liquified natural gas, midstream companies with infrastructure essential to processing, transporting and storing oil, gas and natural gas liquids, and services businesses that help maximize productivity, including those deploying emerging technologies.