Tech’s clean power demand is outpacing supply

Investing.com -- Silicon Valley’s demand for clean energy is running faster than the grid can catch up. UBS says demand from data centers chasing 100% renewable power is now outstripping available supply, which is setting the stage for tighter markets and higher valuations for U.S. solar and storage firms.

Three recent projects highlight the scale of the shortfall. OpenAI, Oracle and Vantage Data Centers plan a massive Wisconsin campus powered by solar, wind and batteries. Google has signed a deal for natural gas generation with carbon capture, while Brookfield may restart a stalled nuclear project in South Carolina.

Together, they show how companies are turning to every available source of low-carbon power.

UBS estimates that at current growth rates, electricity demand from just six tech firms, Amazon, Apple, Google, Meta, Microsoft and Oracle, will exceed the output of the entire U.S. utility-scale solar industry by early 2028.

That imbalance is forcing a broad “yes-and” approach: more solar, more wind, and a revival of nuclear ambitions.

For investors, scarcity is translating into pricing power. Developers and hardware suppliers such as First Solar and Nextracker could benefit from stronger margins and longer demand visibility.

Corporate power purchase contracts are being signed years ahead, and even an end to tax credits may not dent appetite for renewable capacity.

The key idea is that energy transition is less about shifting preferences than physical limits. The AI boom is creating a second wave of industrial demand, one driven by electricity, not oil. For now, the problem isn’t waning enthusiasm for clean energy, but the struggle to build enough of it.

“We continue to believe that the market is underestimating the total scale of the needed, multi-decade U.S. electricity generation build cycle,” analyst at UBS said.

“Solar & storage are the key nearterm winners, despite lagging share price performance, driven by solar’s ability to deploy at scale today.