The cost of energy generated from burning fossil fuels is dominated by the cost of the fuel itself; the power plant costs much less. Non-combustion energy is the opposite: fuel costs are tiny or zero, so the construction cost for the initial plant is much more important.
If you generate a terawatt hour of electricity with natural gas, most of the cost will be from the fuel. A nuclear plant will have a tiny fraction of the cost come from fuel for the same amount of energy. A solar farm will have none of the cost come from fuel.
If AI lowers construction costs, it will improve the relative economics of non-fossil energy compared to fossil energy. A natural gas plant constructed at half the cost will have its final energy cost decrease just a little whereas a half-as-expensive solar farm will have its final energy cost decrease nearly by half. Making clean energy cheaper than fossils means that it will out-compete dirty energy even in locations where there are no explicit policies to reduce CO2 emissions.
You can see the effects on pricing advantage with this interactive simulation of electricity supply in the United States. If you cut the overnight construction cost in half for all generating technologies, solar and wind dominate the country:
It’s the possibility that the AI doesn’t just tell us what we already know but instead comes up with something we don’t. Maybe it comes up with an abundant stable renewable energy source. Maybe a really well working carbon capture.
