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Developers in the renewable energy and data center markets are working to find common ground to meet the growing energy demand driven by the rise of artificial intelligence. Goldman Sachs estimates that global data centers use around 55 GW of electricity and says demand will increase 165% by 2030, thanks to advances in AI. Dan Shugar, CEO of solar panel mounting systems manufacturer Nextracker, told CNBC in June that he expects renewable energy to be the primary source of power for data centers, ahead of natural gas. He said technology companies want to be sustainable, and that solar and energy storage companies should adopt this approach. Dan Thompson, a sustainability and data center analyst at S&P Global, told pv magazine that the renewable energy and data center sectors could have a symbiotic relationship if the details surrounding clean energy scalability are worked out. To date, data centers dont run directly on large-scale renewables; instead, they supply renewables to the grid, and they themselves are supplied by the grid, Thompson explains. Most renewables are too intermittent [in their generation] to supply what is effectively a baseload requirement for data centers. With increasing demand for baseload power, data center energy use is expected to become denser due to the high processing requirements of AI. According to Goldman Sachs, current data center electricity consumption of 162 kW/ft2 could reach 176 kW/ft2 by 2027, excluding cooling and other infrastructure loads. Owners of large hyperscale data centers appear to want to be near renewable energy sites, amid a desire to claim they consume their own clean electrons, Thompson said. Hopes for the future But thats for the future. Right now, Microsoft, Google, and other hyperscale companies want their data centers to be sustainable, even if theyre located next to nuclear and gas-fired power plants. Personally, I think intermittent sources of generation will always be a grid play, rather than a direct consumption model, says Thompson. Adam Elman, Googles director of sustainability for Europe, the Middle East, and Africa, said the company wants its data centers to run on 24/7 carbon-free energy by the end of the decade. With AI-powered facilities under scrutiny for their massive energy needs, Google is securing clean energy through power purchase agreements (PPAs). That should be a target market for renewable energy companies, Nextrackers Shugar told CNBC. Its unclear how hyperscalers identify renewable energy companies, Thompson said, but they can be part of the RE100 group of companies committed to running on 100% clean energy, or be members of the Washington, D.C.-based trade group Clean Energy Buyers Association. Different data centers have different needs. Hyperscalers are looking to integrate large-scale, AI-optimized clean energy into their centers. Edge data centers, which process data closer to end users, are prioritizing local, modular renewable energy solutions. The issue of co-location Colocation is an obvious approach, and Verne has around 250 kWp of solar generating capacity at its data center campus in Pori, Finland. Kim Gunnelius, head of Verne in Finland, explained that the 2,600 m2 solar plant features 850 panels. “The solar power plant provides approximately 10% to 15% of the data center’s energy needs,” said Gunnelius. “Verne’s Pori data center campus is a unique underground facility, spread across nine separate tunnel halls. Our local partners in the Pori district supplied and installed the panels on top of the tunnels. The design of our new data center allows us to have plenty of flat surfaces to install solar panels. We are committed to using 100% green energy, and producing it on-site is a great option, whenever feasible.” However, Gunnelius acknowledged that colocation isnt always possible, as renewable energy isnt available everywhere. The question is no longer how data centers can incorporate green energy, but where its actually viable, he said. The most immediate and practical step is to move to purchasing renewable energy, preferably through PPAs. Whenever feasible, renewable energy should be deployed on-site. In the long term, one can also consider developing data centers in areas with good renewable energy availability. Thats what London-based Verne did in its Nordic markets. We always evaluate the possibility of implementing solar energy when developing a new data center, but its not always feasible to implement it in brownfield sites due to existing structures, Gunnelius explains. In one case, the roof structure, unfortunately, couldnt support solar panels without significant reinforcement. Scalable storage Shaz Shamim, Senior Consultant at LCP Delta, says, “Renewable energy developers often take a traditional approach, prioritizing utility-scale PPAs rather than accommodating data center needs, which include 24/7 power retrofitting, integrated energy storage, flexible load shifting or behind-the-meter [customer-site] generation, and co-location near renewable energy generation centers.” Meeting these needs could be lucrative. Tailor-made solutions could help renewable energy generators tap into the data center market. The US company Exowatt has achieved this by coupling a solar energy collector with a thermal battery that can supply heat or clean electricity on demand. The Exowatt P3 modular system can be installed in 12-meter shipping containers. “Modular systems are much easier to scale,” says Hannan Happi, CEO and co-founder of Exowatt. “We wanted to develop a renewable energy solution to fuel the growing energy demand given the recent boom in AI over the past two years.” The company has received backing from OpenAI CEO Sam Altman. Theres abundant solar energy available, and the world isnt utilizing it to its full potential, says Happi, describing the problem Exowatt has set out to solve. The challenge with solar energy is that its not dispatchable, so its not really applicable to the types of data center loads that seek baseload power or very long dispatch cycles. Exowatt had to devise a way to develop a modular system that could scale linearly and remain dispatchable. According to Happi, dispatchability is driven by the need to extend the lifespan or availability of electrochemical and silver batteries. Although they are becoming cheaper, they are still very expensive and arent suitable for 12, 16, or 18 hours of storage, explains the CEO. We said to ourselves that if we could take incoming solar energy and first convert it into heat, and store heat, because heat is very cheap to store compared to electricity... we could store a lot of it very cheaply and then use it when needed. The startup launched the P3 system in 2024. It is a three-in-one system composed of an optical lens that captures the suns energy and converts it into high-temperature heat. The heat is stored in a sensible heat battery—as opposed to latent or thermochemical heat storage—at a considerably lower cost than electrochemical battery alternatives, Happi explained. The heat is distributed and converted into electricity by the P3s integrated heat engines. High demand This architecture makes the system suitable for powering data centers and other types of commercial industrial loads. Weve seen tremendous demand for the product, particularly from data center customers, says Happi. Data center and other customers find this solution attractive because its something they can deploy in the short term. Happi said Exowatt has “accumulated over 90 GWh of pent-up demand from various types of data center developers, energy developers, operators, etc.” The team is now working on unit construction and scaling. The goal is to have the P3 operating at scale for $0.01/kWh, using US materials. Happi believes the data center market will continue to grow as operators try to stay ahead in the AI ??game. Thermal storage is a technology that balances the grid, allowing green energy to be used twice, reducing the need for other energy sources for heating. As developers continue to open data centers and demand energy, the grid will require significant investment. Goldman Sachs Research has estimated that approximately $720 billion in grid spending will be required by 2030. Happi says the US data center market offers many opportunities and will become more bullish as it responds to the launch of Chinas DeepSeek AI system. He is also optimistic about the Donald Trump administration and its data center expansion proposals. “I think the Trump administration is very, very supportive of data center expansion,” Happi says. “People are super excited about the demand for data centers for certain technologies, renewable technologies, whether it’s nuclear, geothermal, or even solar and batteries. They see a huge opportunity, especially in the United States. Load growth was flat until recently, and now it’s growing at a fairly exponential rate, which creates a huge opportunity for these technologies to come online.” |
