The integration of Artificial Intelligence (AI) into energy systems is driving significant advancements in energy efficiency across sectors such as manufacturing, transportation, and smart grids. AI enables advanced analytics and predictive modelling to monitor consumption patterns, identify inefficiencies, and develop adaptive energy management systems that respond to demand forecasts. In renewable energy, AI enhances performance by optimizing the design of wind turbine blades, solar panel placement, and maintenance schedules, ensuring maximum energy capture and operational efficiency. Beyond energy management, AI-driven automation in industry reduces waste, lowers costs, and supports sustainability. Smart grids powered by AI can dynamically balance supply and demand, predict fluctuations, prevent outages, and improve resilience. In transportation, AI-powered traffic systems, autonomous electric vehicles, and optimized logistics reduce fuel consumption, emissions, and operational expenses. However, challenges hinder widespread adoption. Data privacy concerns arise from reliance on extensive consumer data, requiring secure collection, processing, and storage. High implementation costs, particularly for small and medium-sized enterprises, along with the need for upgrading legacy infrastructures and hiring skilled personnel, present significant barriers. AI algorithms must also be refined for accuracy and adaptability to changing energy demands and climate conditions. Despite these challenges, AI offers vast potential for sustainable energy optimization. Collaboration among policymakers, industry leaders, and researchers is essential to develop regulatory frameworks, financial incentives, and standardized practices for AI integration. Investment in AI research will enhance adaptability, scalability, and seamless integration into existing systems. Future efforts should focus on refining AI models to accelerate the transition toward smarter, more sustainable energy solutions, enabling higher efficiency, reduced operational expenses, and a smaller environmental footprint for a sustainable global future.