Data centers account for half of US clean energy procurement but only 20% in Europe: report

The rising energy demands of global data centers are driving shifts toward renewable power sourcing with US data centers accounting for half of total US corporate clean energy procurement, but only around 20% in Europe, analysts at S&P Global Commodity Insights said in a report Oct. 30.

The US data center sector has contracted at least 50 GW of clean energy by end-Q3 2024 with solar the major source of supply (29 GW), followed by wind (13 GW) and a growing emphasis on hybrid and nuclear solutions, according to the S&P Global Commodity Insights Corporate Renewables Contracts database.

In Europe, the big four tech companies Amazon, Google, Microsoft and Meta have procured over 12 GW of clean energy alone. Spain has become the leading country, primarily focused on solar, while offshore wind PPAs are also a major source of supply, especially for traditional demand hubs in the Frankfurt-London-Amsterdam-Paris (FLAP) region.

"Data centers and large tech companies have significantly increased their clean energy procurements in Europe so far in 2024, contracting approximately 5.3 GW compared to 3.7 GW for all of 2023. Their role is comparable to that of the industrial sector," said Bruno Brunetti, Environmental Markets and PPA Analytics lead at Commodity Insights.

While PPAs are the primary clean energy procurement method among so-called hyperscalers, supplemented by unbundled certificates and green tariffs, enterprise data centers opt for a mix of different energy procurement methods.

As large technology companies are leading in terms of sustainability ambitions, their incremental power demand will shape the clean energy procurement markets.

"Based on our medium power view of incremental power, data centers are poised to contract more than 300 TWh/year of PPAs in the next five years, reshaping clean energy markets, with North America at the forefront, followed by Asia-Pacific and Europe," the report said.

That compares to an estimated total 600 TWh/year global PPA market, the report said.

"In Europe, we see data centers procuring some 70-100 TWh of renewables by 2030, which compares to roughly 30 TWh contracted to date," Brunetti, one of the co-authors of the report added.

"Given their sustainability ambitions and demand needs, data centers will lead in the adoption of new procurement solutions, including hybridization and multi-technology approaches, which have emerged more prominently in the US," he added.

European data hotspots

Forecasts from 451 Research, a unit of S&P Global Market Intelligence, indicated that average European data center demand will double from around 10 GW in 2019 to 20 GW in 2026.

Between 2024 and 2026, demand is set to grow by around a quarter, it said in a report in July.

So far, Germany and the UK registered the biggest growth with European data center demand still clustered around financial centers.

The average size of data centers has risen from 15-30 MW on the late 2010s to now 50-100 MW, according to 451 Research.

As data center demand grows, the flexibility of these facilities will become imperative in shifting loads intraday within local regions but also between countries, the report said noting various uncertainties.

The forecast is "sensitive to the adoption rate of AI balanced by energy efficiency improvements driven by innovation."

While European utilities are upbeat about a boom in data center power demand, the impact of the sector is less significant than in the US.

In terms of energy procurement, Spain has emerged as Europe's largest market for data center PPAs with a total 4.7 GW procured, of which 60% is solar PV.

Ireland is the second largest market in for data center PPAs in Europe with 2 GW of contracted PPA capacity.

The FLAP region, which hosts the highest concentration of data centers in Europe, has some 4.5 GW of contracted capacity, largely dominated by wind and led by the Netherlands (1.5 GW), Germany and the UK (1.3 GW each).