Datacenters driving US clean energy growth while still threatening climate

But not all clean energy segments are benefitting equally. Datacenters are spurring the development of batteries and solar geared toward powering datacenters onsite. But it is having little direct benefit on home rooftop solar.

Among companies at the leading edge is Nextpower, a utility-scale solar infrastructure producer, which just reported 20% year-over growth and recently purchased datacenter battery producer Prevalon.

Google, meanwhile, just developed the world’s largest grid-scale battery to power a datacenter in Minnesota, and purchased an energy company with which it is expanding renewable development, including at a new “off the grid” center in Texas that will include wind, solar, batteries, and gas.

“It looks to me like they’re setting up to be vertically integrated to supply their own electricity, and they’ll drive a lot of development,” Jester said.

There is some benefit to the larger grid. In Wisconsin, energy regulators don’t have a renewable energy standard guiding their decisions, but are building about 15 wind or solar facilities to accommodate Microsoft and Oracle datacenters, though those also include some natural gas, Jester said.

“Between the speed to power and the preference by datacenters companies for clean energy,” the renewables made more sense, Jester added. In Michigan, DTE Energy is building a 330 MW battery system instead of building a new gas plant to support a 1.4GW Oracle datacenter, which was the only way to meet Oracle’s timeline. The company will pay for the batteries.

Davis stressed that the “huge increase” in demand is largely motivating tech companies, not a benevolent desire to save the planet from climate disaster with clean energy.

“I would say tech is desperate for electricity and oftentimes it’s going to whatever is the quickest – it could be the fuel cell, it could be natural gas turbines, or it could be solar and batteries, but the underlying demand is electricity,” Davis said.

An example of that lies in rising star Bloom Energy, which produces relatively cleaner energy, but not renewables. Its solid oxide fuel-cell systems generate power through an electrochemical process that does not emit toxic sulfur oxides, particulate matter, and other dangerous emissions. However, it does emit carbon dioxide, even if its process is more efficient than traditional natural gas turbines.

Bloom can deploy its cells in as little as 90 days, which has drawn intense interest from datacenter owners. It just announced plans to provide power to Oracle, it is in the process of doubling its manufacturing capacity by the end of 2026, and its stock is up 1,338% over the last year.

The green growth spurt comes with some big caveats. Energy demand is hard to predict, even if “the forecasts are staggering”, Davis said. The industry may be susceptible to an AI bubble that many observers say could burst at any time. But a portfolio manager who helps oversee Black Rock’s flagship sustainability funds told Bloomberg the sector is well prepared to withstand a turn.

“We don’t correlate any potential ‘AI bust’ as an existential risk to sustainable energy equities,” the manager said. “Sustainable energy equities could stand to even further benefit as US rates come down and we see a broadening out of the market.”