- Google just shelled out $3 billion as part of a massive hydropower deal
- Hydropower is being used by data center operators around the world, particularly those touting sustainability
- But there are limits to hydropower's availability and construction of new facilities takes a long time
Google is going big on hydropower. The hyperscaler just inked a massive deal with Brookfield Renewable to secure up to 3 gigawatts of hydroelectric capacity, shelling out $3 billion for 670 megawatts upfront from two facilities in Pennsylvania.
The deal was touted as a record-breaker, but is it also a sign of an emerging trend? The answer, it seems, is both yes and no.
On one hand, the announcement came just a month after Microsoft struck a fresh deal for 18 megawatts of hydropower from the Chelan PUD in Washington State. Late last year, Microsoft not only signed its own sprawling deal with Brookfield but another with Powerex to secure more hydropower.
More hydropower deals
Others have also been hopping aboard the hydro power deal train. Earlier this year, data center company DPO teamed up with hydroelectric supplier Consolidated Water Power Company to build a new 20 megawatt AI facility in Wisconsin. In Europe, Switzerland-based Data Center Light and Norway-based Green Mountain claim to run their data centers nearly entirely on hydropower. AI data center builder Polar is also looking to use hydropower for a new facility in Norway. And in China, the 26,000-rack Dongyuemiao Data Center is powered by hydroelectricity from the Three Gorges Dam.
But on the other hand, it’s worth noting that Microsoft has been using hydropower for its data centers for around a decade as part of its renewable energy push. Thus, it’s hard to call hydro a “new” trend.
The real trend is a power shortage that has sent data center operators scrambling for new power generation wherever they can find it. Hydropower is certainly one viable source, but there’s a reason it hasn’t dominated headlines the way natural gas or nuclear power have.
Hydropower’s role
According to an April 2025 International Energy Agency (IEA) report, there are two main types of hydropower: variable, which is tied to the run of a river, and dispatchable, which uses pent up water in reservoirs. The latter “can generally match hourly demand throughout the year, but this is not the case” with variable sources.
The IEA lumps hydropower in with renewable energy sources like solar and wind, which it said today supply around 27% of electricity consumed by data centers worldwide. Renewables are expected to be the fastest-growing electricity source for rising data center power demand, but IEA noted that the 22% annual average growth rate will primarily be driven by wind and solar deployments.
That’s not to say hydro isn’t growing. The U.S. Energy Information Administration (EIA) in May predicted hydropower generation in the country would increase 7.5% in 2025 to account for approximately 6% of electricity generation.
But as far as data centers are concerned, matching demand with the location of hydropower stations is tricky.
For instance, the EIA said about half of hydro generation capacity in the U.S. is in Washington, Oregon and California. As of 2023, New York and Alabama rounded out the top five states providing the most hydropower generation. That doesn’t exactly square with the location of emerging data center hubs in Texas, Arizona and Nevada. And the farther away from the generation point you go, the more power and storage become an issue.
"Hydropower is an ideal form of renewable power for data centers. Like nuclear, hydropower is predictably available on a 24/7 basis when needed and is not subject to the vagaries of weather like other renewables (wind and solar)," Gartner VP Analyst Bob Johnson told Fierce. "However, hydropower requires damming rivers to create reservoirs which can then let the water out on demand to generate power."
Sticky situation
Building new plants to follow the demand isn’t exactly easy either. Johnson said finding a suitable site for a new hydro dam is nigh "impossible" since most prime locations have already been built and are in use. But even if there was one available, standing up new hydro facilities can take anywhere from five to 15 years, according to the IEA’s report. That's plenty longer than the two to three years it takes to build new data centers.
That means at least in the near-term, cloud companies are left to try to tap existing hydro assets rather than signing deals for new power generation projects. But redirecting existing power generation means less for everyone else.
"This means that while the hyperscalers get access to lots of 24/7 power, the other grid users (industrial, residential) lose this access. It doesn’t do anything to generate more renewable power to run the data centers. However, since the power purchased by the hyperscalers is no longer available, rates for other users will most likely increase," he explained.
Thus, "a deal such as this one simply shifts to problem of generating more power onto local power utilities, and forces other users to contend with the risks of power shortages, and possible brownouts while the utilities come up with new generating plants – a process which can take years," Johnson concluded.
So, while we may see cloud companies continue to scoop up what capacity is already out there, we likely won't see a hydro wave akin to the natural gas and nuclear deployments on the horizon.
Update 7/15/2025 4:40 pm ET: This story has been updated to include comments from Gartner.