Are data centres a setback for the green energy transition?
Many operators have pledged to power their facilities with renewable energy but this will take time
In the dying days of Joe Biden’s presidency, he warned that the race to build artificial intelligence data centres must not trample on the green energy transition.
In a January 2025 executive order, the former US president mandated that any developer selected to build on government lands should bring online enough clean energy generation to match their power needs.
“We will not let America be out-built when it comes to the technology that will define the future, nor should we sacrifice critical environmental standards and our shared efforts to protect clean air and clean water,” he said.
Within months, his successor, Donald Trump, tore up that rule book, revoking Biden’s executive order and calling renewable energy a “scam”.
AI promises to boost productivity, aid in scientific discoveries, and cut government waste. But the power-hungry data centres used to train and run AI models are prompting concerns of a setback for the green energy transition, as energy demand sharply rises and the US administration defunds and blocks the development of renewable energy projects.
In his so-called “One Big, Beautiful” tax and spending bill, Trump cut Biden-era tax credits for wind and solar, tightened permitting requirements and halted construction of high-profile projects such as offshore wind developer Ørsted’s Revolution Wind.
At the same time, data centres are contributing to surging power demands across the US. According to BloombergNEF, by 2035 data centres will account for 8.6 per cent of all demand, double their current 3.5 per cent share.
While some developers are secretive about the breakdown of their data centres’ power mix, estimates suggest that fossil fuels are the largest contributor. According to the International Energy Agency, 40 per cent of data centre electricity demand is being met by natural gas. Renewables supply just under a quarter, while nuclear and coal supply 20 and 15 per cent respectively.
Experts say that much of data centres’ energy dilemma comes down to timing, with developers favouring power sources that are easily available for their initial build-outs.
Data centres need to be “brought online very quickly”, says Brandon Michalski, principal economist at MOCA Systems, an engineering and construction group.
“If they can do that while securing renewable energy commitments, they will, but ultimately, the stop-gap is going to be whatever’s on hand, like natural gas and coal.”
Large data centres are reliant on natural gas to supplement their grid power. In June, Ohio regulators approved the construction of a 200 megawatt gas-fired power plant to service a data centre run by Sidecat, an affiliate of Meta. Elon Musk’s Colossus, which his AI company xAI says is the largest supercomputer in the world, at one point made use of 35 methane gas turbines — enough to power more than 300,000 homes — according to the Southern Environmental Law Center.
Many data centre operators have promised to power their facilities with renewable energy. Google has pledged that its campuses will run on carbon-free power 24 hours per day by 2030, while Microsoft plans to be carbon negative by 2030. Amazon Web Services says that it is the largest corporate buyer of clean energy in the world.
However, critics point out that these targets are heavily reliant on renewable energy certificates. A renewable energy certificate allows companies to claim a portion of their electricity came from renewable sources, even if the actual power they consume comes from the grid’s general mix.
Sometimes this helps fund the development of new renewable energy sources. In May 2024, Microsoft and Brookfield Asset Management signed an agreement for Brookfield to develop more than 10.5 gigawatts of clean energy across the US and Europe, while in August Meta committed to buying the credits of a new 100 megawatt solar farm in South Carolina.
However, some renewable energy certificates are “bundled”, meaning that they provide a side revenue stream for existing projects. While this can signal that there is demand for future projects, prices are often too low to fund new investment decisions.
“Data centres will say they’re going green with respect to some of their power,” says Advait Arun, a senior associate for energy finance at the Center for Public Enterprise.
“And that’s good if they bring renewables online, but renewable energy certificates are really only for their emissions accounting, whether it’s for the stock market or investors.”
However, supply chain constraints in the natural gas market could push utilities and developers towards clean energy and greater efficiency. Large manufacturers such as Mitsubishi Power have estimated that turbines ordered today could only be delivered as late as 2030, while Siemens Energy estimates a record backlog of $148bn.
Lauren Shwisberg, a principal in Rocky Mountain Institute’s carbon-free electricity practice, says that data centres are increasingly experimenting with on-site clean energy resources and demand flexibility — meaning data centres can shift or reduce energy use when the grid is under stress or more renewable power is available.
“With the backlog, companies are less confident they can deliver a gas plant before the end of this decade,” she says.
“I’m optimistic that we will see a turn towards quicker to deploy and more affordable resources.”