Hyperscaler procurement to shape US power investment

S&P Global Energy Horizons forecasts that power demand in North America is beginning a trajectory shift, from largely flat during 2008–2024 to 2% a year — with upside potential — out to 2035. The pace of demand growth and the rush to meet it will act as a tailwind for new power generation across the board, with other market conditions, such as policy and speed-to-power, determining which sources are the biggest winners in attracting capital investment.

Much (though not all) of that demand growth is attributable to new demand from data centers. That means the demand profiles of hyperscalers procuring the power for these data centers will be reflected in the mix of power generation sources added to the grid to satisfy new capacity requirements. 

A shift in hyperscaler procurement strategy from relying primarily on power purchase agreements to more direct investment in capacity will also play a decisive role in shaping the evolution of a new and larger power sector. The well-capitalized tech industry will provide a base of financial support for an expanding generation fleet across the board, which will not be limited to cleantech — it also includes power-to-gas as a critical source of firm capacity. But the need to find mechanisms to offset increased emissions will potentially drive investment into higher-cost, emissions-free technologies. This includes nuclear, emerging tech, such as iron-air or thermal battery storage, and technical carbon removal solutions, which could channel more capital into the US carbon capture, utilization, and storage segment.

Hyperscalers’ surging electricity demand is driving a sharp rise in renewable procurement from the companies as they rush to secure power supply while trying to maintain their net-zero emissions goals. 

On a global basis, the share of data center power sourced from renewables among surveyed companies, all of which are major investors in data centers globally, is estimated at 58% in S&P Global Energy Horizons’ 2025 Global Data Centers Clean Energy Sourcing Strategy report, versus about 50% in 2024. North American data centers lead in renewable procurement, reflecting higher loads in the region. Global demand for IT power for graphics processing unit (GPU) chips is growing rapidly in all regions globally, but North America maintains a commanding lead over other regions in absolute terms, even as other regions grow at a faster pace off a smaller base. By 2030, North America will still account for around half of that demand.

US data centers have contracted more than 80 GW of clean energy to date, about 30 GW above our estimate in 2024, which is more than half of the total US corporate clean energy procurement. The procurement trajectories of US hyperscalers, such as Google and Microsoft, are critical drivers of this trend (most, but not all, of their procurement is within the US). Microsoft has now surpassed Amazon as the largest buyer of clean power, with 34.7 GW contracted as of end-September 2025.

Amazon, Google, Microsoft and Meta all rank in the top seven consumers of data center electricity worldwide. All four report 100% renewable electricity purchases — through mechanisms including power purchase agreements, unbundled certificates and green tariffs — as well as electricity consumption levels that exceed those of entire countries. Their capital expenditure plans for 2026 portend massive investments that will require similarly massive expansions in power usage in coming years. Continued efforts to match consumption with clean power will fuel commensurate expansions in procurement. 

Although market-based renewables procurements may cover technology companies’ annual electricity consumption in their entirety (100% renewables matching), key data centers rely on emitting generation. Carbon-emitting sources have recently supplied 20%-35% of incremental power demand from Google and Microsoft.

Despite that, hyperscalers’ carbon intensities sit below a global grid average of about 0.40 metric tons of CO2 equivalent (tCO2e) per megawatt-hour. Meta’s average carbon intensity of the grid used in 2024 was 0.32 tCO2e/MWh and Google’s was 0.35 tCO2e/MWh, using location-based reporting metrics.

S&P Global Energy Horizons’ forecast for the North American power generation mix reflects upside for gas relative to forecasts that preceded the switch from a Biden to a Trump presidency and the dramatic narrowing of incentives available to cleantech. Gas assumes a larger share of North American electricity demand by 2035 than projected in 2024’s high-demand “power crunch” forecast, comprising 29% a decade from now, up from 27% this year.

Data center operators have increasingly been signing gas procurement deals. Atmos Energy announced a contract to provide 30 billion cubic feet per year to a data center with collocated gas-fired generation in August, and Chesapeake Utilities signed a $10 million pipeline deal to serve a fuel cell facility at a data center campus in July. 

But our forecast for the next decade still shows renewables growing alongside gas, albeit at a slightly slower pace than in prior forecasts. The pace of demand growth alone is sufficient incentive to drive financial sector interest in the best new generation assets from across the fuel choice spectrum, even those that have been subject to punitive policy measures. This dynamic is one of the primary factors behind the outperformance of S&P Global’s Clean Energy Transition Index relative to the S&P 500 so far this year.

The increase in hyperscaler gas consumption, rather than displacing clean power, will expand the need for clean power options to offset higher emissions. And announced capex increases by the largest hyperscalers suggest a willingness to spend liberally to ensure that the data centers they require will be built and also supplied with sufficient power — and offsets — to meet consumer demand and sustainability goals.

This has translated into a number of hyperscaler-backed deals in renewables, as well as nuclear and carbon capture, utilization and storage (CCUS).

Last month, Google announced plans to invest $4 billion in Arkansas through 2027, with project plans including a data center, a 600- MW solar project in partnership with Entergy and energy efficiency programs in the surrounding area. Enbridge reached a final investment decision earlier this year to build a 600-MW solar project in Texas to provide power to a Meta data center near San Antonio.

Meta also signed a 20-year nuclear agreement with Constellation for power from the Clinton Power Station in Illinois from 2027. This is just one example of a larger trend of deals illustrating the appeal of nuclear to hyperscalers as a firm, carbon-free electricity source. In addition, ExxonMobil outlined plans in December 2024 to build a 1.5-GW natural gas-fired facility, sourcing gas from the Permian Basin, to provide electricity to a data center. The facility would deploy carbon capture and storage to capture more than 90% of the associated emissions for underground storage in the US Gulf Coast. 

The long-term incentives for investing in renewables and nuclear are clearer than those for gas-plus-CCUS, which is not emissions free and may expose hyperscalers to stakeholder accusations of locking in long-term, embedded emissions. With sustainability goals still in place among key hyperscalers, particularly regarding round-the-clock carbon-free electricity, increased reliance on gas may be more of a transition strategy than a long-term play. However, smaller data centers might have no option other than to rely on grid power, which implies a higher reliance on gas.