Over 26 GW of renewables contracted to data center providers, customers in US

Introduction

The corporate renewable market segment in the United States continued its impressive growth in 2021, with current wind and solar capacity contracted to corporate off-takers exceeding 47 GW. Power-hungry data centers are driving a substantial portion of this purchased capacity, with major data center providers and customers accounting for roughly a 60% share.

Tech giants such as Amazon, Apple, Google, Meta and Microsoft own and operate dozens of energy-intensive data centers across the U.S. These companies also have self-imposed clean energy commitments, with many aiming to go 100% renewable by 2030 or sooner. Not surprisingly, this combination has made them some of the largest purchasers of renewable energy — outside of utilities — in the U.S.

Although data centers are located across the country, there are several areas with higher densities. Virginia is the largest data center market in the world, and, as a result, corporate renewable purchases to date in the state have soared to 2.8 GW. Amazon has established a data center footprint in Ohio, leading to multiple renewable power purchase agreements in the state. Finally, the Western U.S. has several areas with multiple data centers, including the metro areas of Phoenix; Seattle; San Jose, Calif.; and Portland, Ore. Renewable development, particularly solar and energy storage, is soaring in these areas as well, providing data-center-utilizing corporate off-takers plenty of clean energy capacity to meet their renewable energy demands.

The top six companies in contracted renewable energy capacity — both operating and planned — all heavily utilize data centers as part of their core businesses. They are all hyperscalers: online service providers with digital delivery infrastructure that continues to scale globally to keep pace with demand; this consumes large amounts of capacity, in the form of data center space and power. Amazon.com Inc. has taken the lead in corporate renewable capacity, with over 7.4 GW contracted in the U.S. and over 12 GW worldwide. Facebook parent Meta Platforms Inc., Alphabet Inc. subsidiary Google LLC and Microsoft Corp. round out the top four, with 5.4 GW, 4.8 GW and 2.6 GW of contracted wind and solar capacity, respectively. These four companies both own and lease multiple data centers throughout the U.S.

Telecommunications companies AT&T Inc. and Verizon Communications Inc. are fifth and sixth in U.S. corporate renewable rankings, and while both companies have divested their data center assets, they continue to be heavy users of data centers and technology for service delivery.

Tech company Apple Inc. also relies heavily on data centers and currently ranks 11th, with 800 MW of utility-scale renewable purchases.

Data center providers Iron Mountain Inc., Digital Realty Trust Inc., QTS Realty Trust Inc. and Switch Inc. are also increasing their renewable energy purchases. Combined, these four companies have contracted nearly 1,200 MW of wind and solar capacity in the U.S. — up from 500 MW two years ago.

Apple, Google, Iron Mountain and Microsoft are all members of the RE100 global corporate initiative. This requires fulfilling strict criteria in addition to committing to being 100% renewable-powered. Google and Microsoft have upped the ante on their clean energy commitments, with both companies announcing their intentions to be powered by renewable energy on a 24/7 basis. Amazon set a target to power all operations with 100% renewable energy by 2030 and to achieve net-zero carbon emissions by 2040. Meta's 100% renewable target was achieved in 2020, according to a press release from the social media company. Switch and QTS Realty Trust have also announced 100% renewable energy commitments.

Key markets

Data centers are scattered all around the U.S., but there are several markets where hyperscalers and providers have concentrated their operations. Virginia remains the top data center market, not just in the U.S., but in the world. Additionally, the Western U.S. and the Midwest — notably Ohio — are increasingly popular markets for new data centers. Previously, the data center and renewable energy footprint in Oklahoma and Texas were examined. Both remain noteworthy markets, with hundreds of data centers in operation and nearly 18 GW of renewable energy contracted to corporate off-takers in operation and in planning across the two states.

Mid-Atlantic

Northern Virginia remains the largest leased data center market in the world, with in excess of 13.8 million square feet of operational space built out to date. The five largest hyperscale companies — Amazon, Apple, Meta, Google and Microsoft — own or lease more than 70 data centers in Virginia alone. There are several reasons for the emergence of northern Virginia as a global data center hub, including tax incentives and cost-effective land, but most important is its proximity to a very dense collection of networks, dating back to one of the original internet exchange points in the U.S.: MAE-East.

In April 2020, Virginia signed into law the Virginia Clean Economy Act, requiring the energy provided by Dominion Energy Inc. subsidiary Virginia Electric and Power Co. and American Electric Power Co. Inc. subsidiary Appalachian Power Co. to be sourced from 100% renewable electricity by 2045 and 2050, respectively. The combination of the Clean Economy Act requirements and a massive network of power-hungry data centers owned and/or utilized by corporations with aggressive renewable energy commitments has made Virginia a key market for renewable development. More than 2 GW of renewable energy — almost entirely solar — are in operation in the state, but the development pipeline has grown to over 8.8 GW, according to S&P Global Commodity Insights data. Excluding the 2,640-MW Virginia Beach Offshore Wind Project (Coastal Virginia Offshore Wind), which is still in early planning, most of the proposed pipeline consists of solar projects.

More than 2.8 GW of both planned and operating solar capacity in Virginia is contracted to corporate off-takers, up from 1.7 GW a mere two years ago. Amazon owns the largest portfolio in the state, with just over 1,100 MW spread across 18 projects. These purchases help power the 60-plus data centers in the state-owned or leased by the online retailer and cloud services provider. Meta has contracted over 500 MW of solar to date in Virginia, with Microsoft adding another 320 MW. The latter two companies own or lease 15 data centers in the state.

Neighboring states Pennsylvania, Delaware and North Carolina have another 1,200 MW of renewable capacity contracted to Apple, Amazon, Meta, Google and Microsoft alone. Since the majority of these projects reside within the same PJM Interconnection LLC grid, the power and associated renewable energy credits can easily help to offset data center electricity consumption in Virginia. (There are a handful of data centers in North Carolina as well, owned by Apple, Meta and Google.)

Midwest

The Midwest states of Iowa, Illinois and Indiana have emerged as growing data center markets. Ohio, in particular, has become a hub for Amazon; it owns 19 data centers in the Buckeye state. Favorable tax incentives, as well as special discounted electricity rates from state energy provider Ohio Power Co., add to the interest, and Ohio is also physically strategic for the hyperscalers due to its proximity to the population in the eastern half of the U.S. Additionally, direct access programs in the state allow Amazon and other companies to source the cheapest and greenest energy on the open market while compensating the local utilities for their transmission and distribution network.

Although there is a renewable portfolio standard in Ohio, it ranks among the lowest in the country and was lowered in 2019 from 12.5% to 8.5.% by 2026. Despite the relatively lax state-level legislation, Ohio is expected to become a key market for wind and solar development. Just over 1,100 MW of wind and 475 MW of solar are in operation in the state. Solar developers have flocked there in recent years, with the pipeline for solar surpassing 9 GW, making it the 4th highest in the country. The rapid installation of data centers is a key driver for this renewable buildout. Roughly 3.4 GW of utility-scale renewable capacity in Ohio is contracted to non-utility off-takers. Not surprisingly, Amazon accounts for 2.4 GW of this, with most of this capacity still in development and expected to come online by the end of 2023.

Meta contracts with two projects in the state totaling 300 MW, including the Invenergy LLC-developed 150-MW Hardin Solar Energy Center Facility. Microsoft is the solar off-taker for the 125-MW Timber Road IV Wind Farm owned by EDP - Energias de Portugal SA subsidiary EDP Renewables North America LLC.

Illinois is the third-largest corporate renewables market behind Texas and Ohio, and while there is a high diversity of companies purchasing renewable power in the state, Amazon, Apple, Meta and Microsoft all have projects in the state totaling just over 1,000 MW. Both Microsoft and Meta own data centers in Illinois.

Iowa is home to over 20 data centers servicing hyperscalers, with Meta, Google and Microsoft all owning five or more facilities. Google has taken advantage of the vast network of wind projects, with contracts totaling 1,100 MW. The largest is the 502-MW Highland Wind (Wind VIII & IX Project) project owned by Berkshire Hathaway Inc. subsidiary MidAmerican Energy Co. MidAmerican Energy also operates the 141-MW Wellsburg Wind (Wind VIII Project), which sells all of its output to Meta.

West

Several forces have come together to make the Western U.S. a key market for both data center providers and hyperscalers. First and foremost is its sheer proximity to California's Silicon Valley, where many data center-reliant companies started out. Second is the existence of local incentives in growing markets such as Phoenix; Las Vegas; and Portland, Ore. Third is the rapid expansion of wind, solar and energy storage across the West helping to power these facilities. Fourth is the presence of large population centers along the West Coast, meaning demand for cloud-based services is high.

Apple has multiple data centers across Oregon, California, Nevada and Arizona and is offsetting this power consumption with renewable purchases in all four states totaling over 500 MW. The company's largest renewable purchase is the 217-MW Montague Wind Facility (Leaning Juniper III), operated by Iberdrola SA subsidiary Avangrid Renewables LLC. This, along with a 56-MW solar contract, helps power Apple's three data centers in Prineville, Ore.

Amazon has an extensive data center network across the West in California, Oregon and Washington. The company's renewable contracts have not caught up with this growth, with only three utility-scale projects in the region. Microsoft also owns multiple data centers in the region, including many in Arizona and California. Naturally, the Redmond, Wash.-based tech company also has a large collection of data centers in the Evergreen State, with most located around the town of Quincy.

Google's data center footprint in the West is comparatively small but hardly negligible, with large facilities in Oregon, Nevada and Arizona. The search and advertising company only has a handful of renewable deals in the West, according to S&P Global Commodity Insights tracking, but it includes one of the largest corporate renewable deals in the U.S. In 2020, Google inked a massive solar and storage deal with NV Energy Inc. totaling 350 MW of solar and 280 MW of storage from the Gemini Solar + Battery Storage Project, to help power the company's data center in Henderson, Nev.

Meta is the largest corporate renewable purchaser in the West, with over 1,400 MW spread across Oregon, Utah and New Mexico. The social media company has 18 data centers both in operation and in planning, focused in three distinct areas in the region: Prineville, Ore; Mesa, Ariz.; and Los Lunas, N.M. Notable projects contracted to Meta include the Sky Ranch Solar & Battery Storage Project, developed by NextEra Energy Inc. When completed in 2023, the project will have 190 MW of solar co-located with 100 MW of battery storage. The Facebook parent company has also purchased nearly 700 MW of solar in Utah to help power its massive Eagle Mountain data center, which is estimated to reach 1.5 million square feet once expansions are finished.

The outlook

The data center industry continues to evolve and expand. The combination of this growth, the immense energy demand of these facilities and the aggressive self-imposed renewable energy commitments of their customers and owners will lead to increasing impacts on the renewables and overall energy industry.

That said, the biggest impact could come in the growing interest from corporations in powering their facilities on clean energy on an around-the-clock basis. Doing so will require not only substantial development of clean energy resources but also significant investment in transmission and distribution infrastructure and next-generation technology. For any given company, equally important to meeting this ambitious goal is doing so without any disruption to its operations and services, of which data centers are the backbone. The success of these initiatives could help lay the groundwork for the nationwide clean energy transition.

^{This article is the product of a collaborative effort between S&P Global Market Intelligence's Energy Research team and 451 Research, Datacenter Knowledge Base.}

^{Regulatory Research Associates is a group within S&P Global Commodity Insights.}

^{S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.}

^{Tony Lenoir, Liz Thomas and Kelly Morgan contributed to this article.}

^{This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.}