The surge in electricity demand from corporate America, specifically Big Tech companies, combined with the retirement of coal plants in the United States, presents a significant opportunity for renewable energy sources. According to UBS, the U.S. will require an additional 850 terawatt hours of annual generation capacity by 2030. Solar and wind power are projected to supply 40% and 30% of this energy demand, respectively, with natural gas meeting the remaining 30%.
UBS analysts, led by Jon Windham, emphasize that the construction of renewable energy projects is largely displacing coal generation in the U.S. This transition is driven by a dual trend of increasing corporate electricity demand and financial backing for renewable energy initiatives. Companies such as Amazon, Meta Platforms, Microsoft, and Google have committed to 100% clean energy or 100% renewable energy targets, stimulating market growth.
While major tech firms dominate the scene, companies across various sectors including Nike, Pepsi, and Starbucks also have ambitious renewable energy goals. The distinctive aspect of tech companies lies in their substantial demand for electricity as they expand data center infrastructures. Artificial intelligence, in particular, demands significantly more electricity than traditional online activities like a Google search.
The tech giants are securing power agreements ahead of their data center expansions, with Amazon, Meta, Microsoft, and Google collectively contracting 230 terawatt hours of power. This increased demand for renewable energy generation creates a significant market opportunity, especially for reliable electricity supply directly linked to data center infrastructure. The anticipated generation from these agreements is set to come online within the next two years.
An increasing proportion of renewable energy deployments are financially supported by high-growth electricity consumers, fostering a sustainable market for renewable energy projects. First Solar is identified as the primary beneficiary in the renewable energy sector due to its leading position in producing solar modules within the United States. Other recommended stock picks by UBS include Fluence Energy, a prominent battery company, and Array Technologies, which specializes in innovative solar panel positioning systems.
The growing electricity demand from major corporations, particularly in the tech sector, is propelling the expansion of renewable energy generation in the United States. This shift away from coal toward solar and wind power presents a promising opportunity for sustainable energy solutions and underscores the increasing importance of renewable energy in meeting the evolving energy needs of corporate America.