The clean energy sector is caught in a paradoxical embrace with the rapidly expanding US data centre industry. On one hand, these power-hungry facilities are driving unprecedented investment and growth in renewable energy sources like wind and solar, fuelling concerns about their broader environmental impact on the other. The boom in artificial intelligence has exacerbated this trend, as data centres devour increasingly more processing power and storage, placing a strain on electricity demand.
As utilities across the US accelerate construction of new fossil-fuel plants or extend the operational life of existing gas and coal facilities to meet escalating demands from data centres, observers caution that this paradox presents significant environmental challenges. In states like Michigan, where data centres have disrupted planned transitions towards fully renewable energy grids, the gas industry - including fracking and pipeline firms - is a major beneficiary of increased demand.
However, supply chain disruptions, regulatory hurdles, and energy generation shortages are causing delays of up to 12 years for data centres to connect to the main electricity grid. This has compelled major technology companies to allocate substantial capital towards generating their own power, turning to battery storage, solar, wind, and fuel cells as quickest and most cost-effective alternatives to ensure operational continuity. Douglas Jester, a clean energy consultant with 5 Lakes Energy, describes this phenomenon as "unquestionable" and a paradox in driving renewable energy growth.
The clean energy industry experienced a downturn after the period of robust growth in 2020 driven by low interest rates and government investment, as inflation made projects more expensive and energy demand plateaued. Share prices for many clean energy companies, as tracked by the IShares Global Clean Energy ETF, saw a significant decline of approximately 80% between late 2021 and early 2025. However, the last year has seen a rebound, with the ETF up by around 52%, largely attributed to surging demand from data centres.
This renewed interest is not uniform across all clean energy segments. While battery storage and utility-scale solar projects directly benefiting data centre operations are thriving, the impact on residential rooftop solar, for example, is less direct. Companies like Nextpower, a utility-scale solar infrastructure producer, are reporting substantial growth, including a 20% year-over increase, and are making strategic acquisitions such as datacenter battery producer Prevalon. Google has also invested significantly, developing the world's largest grid-scale battery for a Minnesota data centre and expanding renewable development for its own facilities, including an 'off-grid' centre in Texas.