Renewable energy developers secured contracts for at least 4,012.6 MW of capacity in the 12 months ended Feb. 1 that tech companies will use in part or entirely to power US datacenters, according to an analysis of S&P Global Commodity Insights data.
The output from 24 projects was sold to Amazon.com Inc., Meta Platforms Inc., and Alphabet Inc., the parent company of Google LLC, which are among the major tech companies known as hyperscalers — large cloud service providers that offer computing and storage services at a massive scale and rely heavily on datacenters as part of their core business. Renewable energy generators, along with utility companies seeing an influx of datacenters in their service territories, are capitalizing on skyrocketing electricity demand for round-the-clock power.
AES Corp. contracted the most megawatts that could be used by datacenters, selling all 1,000 MW of capacity from its planned Bellefield and Bellefield 2 solar projects in California to Amazon. The solar-plus-storage projects, each of which also have up to 500 MW of colocated four-hour battery storage capacity, known as the Bellefield Battery Storage Project and Bellefield 2 Battery Storage Farm, are expected to come online in 2025 and 2026, respectively.
AES also has long-term contracts to supply carbon-free power to Microsoft Corp. datacenters in California and Google datacenters in Virginia, where electricity demand increased by roughly 500% from 2013 to 2022, with Loudoun County, Va., becoming the top datacenter market in the world, according to the region's local utility, Dominion Energy Inc.
"In markets like [the PJM Interconnection LLC] or most of the Northeast markets, projects have become smaller ... but we are seeing recent projects that we're signing with them in the 100 to 200 megawatts," AES Chief Commercial Officer Kleber Costa said during a Jan. 18 investor call. "Now when you go out to the west and [the] Electric Reliability Council of Texas Inc., you still see projects in the hundreds of megawatts size, both for solar and wind."
Just over 1,715 MW, or about 43%, of the capacity sold in the 12 months to Feb. 1 was for projects in Texas, while 1,050 MW of capacity was signed for projects in California.
After AES, Excelsior Energy Capital LP contracted the second-largest amount of megawatts, selling 525 MW of the 682.5-MW Faraday Solar Project's capacity in Utah to Meta via Berkshire Hathaway Energy subsidiary PacifiCorp. Commercial operations are expected to begin in the third quarter of 2025.
Germany-headquartered power provider RWE AG also contracted a substantial amount of capacity bound for datacenters, selling a combined 400 MW from the Montgomery Ranch Wind Project and Stoneridge Solar Project in Texas to Amazon.
Projects owned by private capital, pension funds and sovereign wealth funds accounted for nearly 1,566 MW of capacity contracted to tech companies for datacenter use. Some of those projects are backed by capital from asset managers including Ares Management Corp., TPG Inc. and D.E. Shaw & Co. LP.
While solar and wind account for all of the contracts signed during the last 12 months, tech companies are eyeing other zero-carbon sources such as nuclear energy.
Talen Energy Corp. affiliate Cumulus Growth Holdings LLC earlier in March sold its datacenter campus in Pennsylvania to Amazon subsidiary Amazon Web Services Inc. for $650 million. The campus, which has up to 960 MW of datacenter capacity, is adjacent to and will be powered by Talen's 2,494-MW Susquehanna Nuclear power plant.
Still, tech companies face challenges to procuring enough renewable energy as electricity demand surges.
"Not only are tech companies contending with stiff pushback from local grid operators worrying about long-term reliability, they are also facing increasing difficulties in meeting their own CO2-mitigation goals in the face of this rapidly rising demand for electricity," analysts at Regulatory Research Associates, a group within S&P Global Commodity Insights, wrote March 12.