Importance Score: 65 / 100 🔴
Surge in AI Fuels Data Center Expansion, Boosting Solar Power Demand
The rapid expansion of artificial intelligence (AI) technologies is driving a significant increase in data center construction, leading to a corresponding surge in demand for power. This growth is proving beneficial for technology providers like Nvidia, and simultaneously triggering unprecedented growth within the power generation sector, particularly for renewable energy sources.
Exponential Growth in Data Center Power Consumption
Industry analysts at JLL project that the burgeoning number of new and expanded data centers will double the sector’s power consumption by 2029. In anticipation of this escalating need, developers and technology firms are aggressively securing power capacity. While nuclear and natural gas energy sectors are experiencing a boost from the forecasted demands, solar power has emerged as a particularly advantageous technology in the immediate future.
Solar Power’s Advantage in the Data Center Boom
Despite solar power’s inherent intermittency – its power generation is dependent on sunlight – the compelling benefits have spurred companies to finalize substantial procurement agreements at an accelerated rate.
Key Advantages of Solar for Data Centers
- Proven Technology: Unlike nascent technologies like advanced nuclear reactors yet to achieve commercial deployment, solar power is a mature and reliable technology.
- Rapid Deployment: Compared to new natural gas power plants requiring extensive planning and construction timelines, solar farms boast a significantly shorter average completion time of approximately 18 months.
- Cost-Effectiveness: Solar energy stands out as one of the most economical sources of new electricity generating capacity.
Since the beginning of 2025, technology companies and data center operators have committed to 12 major solar energy deals, each contributing over 100 megawatts of capacity to the electrical grid.
January: Meta Leads with Major Solar Investments
January 2025 saw Meta initiate the year with a substantial 200-megawatt solar energy agreement with the global utility company Engie. This procurement is designated for a solar farm strategically located near one of Meta’s existing data centers in Texas. Prior to this agreement, Meta already possessed a substantial renewable energy portfolio exceeding 12 gigawatts of generating capacity.
Later in January, reports from Bloomberg indicated that the Stargate AI partnership, involving OpenAI, Oracle, and SoftBank Group, would partly rely on solar power. SB Energy, a subsidiary of SoftBank, is projected to develop solar energy installations complemented by grid-scale battery storage solutions.
Concluding January, Meta solidified another significant solar energy contract, this time with the Spanish renewable energy developer Zelestra, for a capacity of 595 megawatts.
February: Microsoft and Amazon Join the Solar Push
Meta extended its solar investment momentum into February, committing to a 505-megawatt solar project in collaboration with Cypress Creek Renewables. Cypress Creek Renewables is spearheading the development of this large-scale installation in Coleman County, Texas, situated roughly 150 miles northwest of Austin.
Microsoft also entered the competitive landscape in February. As a long-standing purchaser of renewable energy to support its extensive operations, Microsoft augmented its portfolio with an additional 389 megawatts of solar capacity through a deal with EDP Renewables North America. This agreement encompasses three distinct solar farms, with two located in Illinois and one in Texas. These acquisitions reinforce Microsoft’s dedication to powering its operations entirely with zero-carbon energy sources.
Amazon finalized a substantial renewable energy purchase, backing a hybrid project situated on the Iberian Peninsula. This comprehensive project incorporates wind, solar, and pumped-hydroelectric storage technologies. The agreement encompassed a total capacity of 476 megawatts, with solar energy contributing 212 megawatts.
Beyond the United States, data center operators are actively investing in solar energy solutions. In India, CtrlS constructed its own 125-megawatt solar facility across two phases. The initial phase was completed in June 2024, followed by the second phase in early February. In South America, Telecom Argentina entered into a power purchase agreement to acquire electricity from a 130-megawatt solar farm developed by MSU Green Energy.
March: Continued Expansion with New Deals
Microsoft further expanded its solar energy portfolio in March, adding three additional solar developments, primarily concentrated in the Midwest region. These projects, spanning Illinois, Michigan, and Missouri, are being developed by AES. Collectively, these initiatives will furnish Microsoft with 475 megawatts of power capacity, adding to its already substantial 34-gigawatt portfolio of renewable energy assets.
Cisco entered the solar energy procurement arena with a 100-megawatt agreement with X-Elio, a solar developer owned by Brookfield, a prominent asset management firm with significant investments in renewable energy. These power purchase agreements will enable Cisco to procure capacity from two separate solar energy projects located in Texas.
Meta further augmented its solar energy holdings in March, adding 200 megawatts of capacity through an agreement with RWE. The solar farm will be constructed just southeast of Austin.
In Italy, data center operator Data4 concluded a 10-year agreement with utility provider Edison Energia to purchase power from a 148-megawatt solar farm situated northwest of Rome.
Continued Solar Growth Anticipated
As technology companies accelerate the integration of AI into a wide range of products and markets, data centers are undergoing rapid expansion to meet the computational demands. This expansion necessitates significant power resources, and solar energy is uniquely positioned to address this growing requirement.
Utility-scale solar power is already recognized as one of the most cost-effective forms of new generation capacity, even before considering subsidies, outperforming all energy sources except onshore wind. Furthermore, its rapid deployment capabilities and phased commissioning process allow data centers to access power even before the complete project is finalized.
These advantageous characteristics have collectively positioned solar energy favorably, resulting in numerous procurement agreements with major technology corporations and data center developers. This trend is expected to persist, solidifying solar power as a key energy solution for the data center industry’s growth trajectory.