- Once popular, renewables have seemingly dropped out of data center power conversations
- Renewables do face intermittency and power density issues, but Morningstar believes they'll play a large role in meeting rising power demand
- In Brazil, Elea is working to build a gigawatt-scale AI factory powered by renewables
Nuclear. Natural gas. Hydrogen. These three fuel sources have played a starring role in recent discussions about the future of data center power in the U.S. as tech titans scramble to meet AI-driven demand for more compute. But renewable options have been noticeably sidelined after years in the spotlight thanks to sustainability efforts.
Amazon (times two), Google and Microsoft all quietly inked power purchase agreements with wind farms over the past few months. But these barely registered. The only real blip on the renewables radar was Google’s big hydropower deal and even that was mostly because it was just something different.
The minimization of renewables – including solar, hydropower and wind – in the data center power conversation in the U.S. is interesting considering such sources are expected to play a large role in global incremental power generation. According to the International Energy Agency, renewables will help meet half of the global growth in data center power demand, with generation forecast to increase by 450 TWh by 2035.
Even in the U.S., Morningstar Equity Research predicted in a July 2025 report Renewables will account for 25% of incremental power demand through 2030. That’s more than the 15% nuclear – which has received significantly more buzz – is expected to contribute.
Why the shift away from renewables?
So, what gives with the shift away from renewables? Well, as far as the U.S. is concerned, politics plays a role.
For instance, President Donald Trump’s administration just last week issued a stop-work order for an offshore wind farm outside Rhode Island. It cited “national security interests” as its reasoning.
The move came after Trump implemented a ban on new offshore wind farm projects immediately after taking office in January.
“We see the market as overly focused on recent U.S. policy uncertainty and overlooking the role of renewables in meeting AI power demand,” Morningstar wrote.
Politics aside, the market more generally has taken the view that renewables have limitations – namely intermittency and a lack of power density – that will preclude them from benefitting from the data center boom. That’s not an unfair assumption given rack densities are only expected to continue rising and nuclear and natural gas right now are the only technologies that can deliver power capacity in the gigawatt range.
Morningstar acknowledged its view differs from the mainstream market’s take, but insisted “Renewables are advantaged versus other fuel sources in carbon emissions, economics, and time to power.” Plus, Morningstar argued the role of renewables is more about contributing to base load generation.
“We see renewables as part of an all-of-the-above solution to meet rising data center demand,” the firm concluded. “So, we expect rising power demand from AI to drive incremental demand for new wind, solar, and battery storage generation.”
Zooming out on renewables
U.S. aside, other countries remain gung-ho on renewable energy for data centers.
In Brazil, for instance, Elea Data Center’s Rio AI City project aims to scale to 3.2 GW of capacity using 100% renewable energy.
Asked by Fierce how it plans to do so, a company representative noted 90% of Brazil’s electricity comes from sources including wind, solar and hydropower. That compares to around 21% in the U.S. as of 2023.
The Elea rep noted it is also using renewable power purchase agreements, and is evaluating other technologies like battery energy storage systems (BESS) and hydrogen-powered generators.
Rio AI City currently comprises a 5 MW RJO1 facility, with an 80MW RJO2 site expected to come online in 2026. Two more facilities – RJO3 and RJO4 sites will follow – adding another 120 MW of capacity.
“Our long-term vision for the campus has the potential to reach up to 3.2 GW,” the rep said. “These facilities are being developed with strict standards of energy efficiency, climate resilience, and digital security, which is aligned with our long-term vision of sustainable infrastructure.”