[2603.26678] Power Couple? AI Growth and Renewable Energy Investment

Computer Science > Computers and Society arXiv:2603.26678 (cs) [Submitted on 8 Mar 2026] Title:Power Couple? AI Growth and Renewable Energy Investment Authors:Luyi Gui, Tinglong Dai View a PDF of the paper titled Power Couple? AI Growth and Renewable Energy Investment, by Luyi Gui and Tinglong Dai View PDF HTML (experimental) Abstract:AI and renewable energy are increasingly framed as a "power couple" -- the idea that surging AI electricity demand will accelerate clean-energy investment -- yet concerns persist that AI will instead entrench fossil-fuel carbon lock-in. We reconcile these views by modeling the equilibrium interaction between AI growth and renewable investment. In a parsimonious game, a policymaker invests in renewable capacity available to AI and an AI developer chooses capability; the equilibrium depends on scaling regimes and market incentives. When the market payoff to capability is supermodular and performance gains are near-linear in compute, developers push toward frontier scale even when the marginal megawatt-hour is fossil-based. In this regime, renewable expansion can primarily relax scaling constraints rather than displace fossil generation one-for-one, weakening incentives to build enough clean capacity and reinforcing fossil dependence. This yields an "adaptation trap": as climate damages rise, the value of AI-enabled adaptation increases, which strengthens incentives to enable frontier scaling while tolerating residual fossil use. When AI faces d...