Above image: Google Partners for renewable energy with NextEra Energy
Artificial intelligence (AI) may be software, but it is built from hardware: steel, copper, concrete, and energy. Every search query, AI-generated image or digital transaction routes through a data center, the brick-and-mortar to the cloud. These facilities, ranging from modest colocation sites to sprawling hyperscale campuses, run 24/7 to store and process the data behind cloud computing, AI, streaming and more.
The companies that own and operate this infrastructure fall into two groups: hyperscale cloud providers like Amazon Web Services (AWS), Google and Microsoft, and the real estate owners such as real estate investment trusts (REITs) like Digital Realty and Equinix.1,2 Hyperscalers are no longer just tenants, and data center REITs are not just landlords. Both the tenant and the landlord are now active energy market makers who are reshaping how power is sourced, scheduled and delivered.
Grappling with increased energy demand
Electricity demand from US data centers is rising at a pace not seen in decades. According to Lawrence Berkeley National Laboratory, data center electricity use grew 7% annually between 2014–2018, then more than doubled to 18% annually from 2018–2023, largely driven by cloud expansion and AI-optimized servers.3 It is estimated that by 2028, AI workloads alone could increase total data center energy use by 20–40% above baseline forecasts.4
Globally, the International Energy Agency (IEA) projects data center demand will more than double to 945 terrawatt-hours (TWh) by 2030, with half of that new demand met by renewables.5 One TWh is equal to 1,000,000 megawatt-hours (MWh). For human scale, that’s enough to power nearly 97,500 U.S. homes for an entire year.6
Hyperscalers and data center REITs include renewables in their procurement strategies for a few reasons. For one, corporate carbon reduction targets are driving procurement at scale. Google has a 24/7 clean power goal and both Digital Realty and Equinix have stated they are looking for 100% renewable energy coverage. From an economic point-of-view, long-term power purchase agreements (PPAs) hedge against volatile energy prices. More local renewable projects, such as AWS’s 1.3 GW build in Virginia, secure reliable capacity near the point-of-use.7 Clean power leadership also pays off in faster permitting, stronger community support and a head start on the threat of stricter emissions regulations.
Four ways Data Center REITs and Hyperscalers are reinventing energy procurement
1) Financing New Renewable Capacity with PPAs and vPPAs –Power purchase agreements (PPAs) and virtual PPAs give renewable developers the revenue certainty to build projects that might not otherwise pencil. For the energy buyer, the PPA locks in a price over the life of the contract which helps hedge against energy price volatility. Equinix reached 100% renewable coverage in North America through deals for 105 MW of solar in California and 225 MW of wind in Texas and Oklahoma.8 AWS operates on an even larger scale with over 30 GW contracted globally across 400+ projects making it the world’s largest corporate renewables buyer.9
Digital realty data center, courtesy of Vert Asset Management
2) Hour-by-Hour Renewable Energy Matching Programs –Virtual PPAs sometimes get a bad rap, because they are physically removed, often across state lines, from the property that benefits from the renewable energy. Companies are working to match the hour and location of renewable energy consumption. Google partnered with the AES Corporation (a global energy company) to finance wind, solar, hydro and battery storage to cover 90% of the hourly energy consumed by the hyperscaler’s Virginia-based data centers.10 Digital Realty is rolling out hourly matching for colocation properties, starting with six Stockholm sites via a partnership with Vattenfall, and plans to extend it to over 150 facilities worldwide.11 It is an energy procurement investment that creates production reliability with reduced grid emissions.
3) Properties as an Energy Source –For many years, data centers participated in “demand response” programs with utilities because their energy draw and supply can make a real difference at specific times in the day or year when the grid is stressed. Demand-response is where the data center facility schedules to reduce its energy load during peak demand events such as a heat wave to reduce strain for normal consumers. More recently, data center properties are starting to install on-site battery storage and shifting non-critical workloads such as scheduled backups or data replication to align with renewable energy availability or grid needs. For REITs like Equinix and Digital Realty, coupling long-term clean energy contracts with scheduled workloads, charging or discharging batteries and adjusting cooling times turns power management into a grid service. Equinix partnered with Bloom Energy and Southern Company to deploy fuel cells at 12 data centers across Silicon Valley, New York and Los Angeles.12 This project provides “always-on” reducing strain on the local grid.
4) Rewiring the Grid –Hyperscalers and data center REITs are beginning to co-develop energy infrastructure with utilities. The companies are building out dedicated substations, providing transmission upgrades and private wires connecting campuses to renewables. Google’s partnership with the AES Corporation shows how two sectors are partnering to finance wind, solar, hydro and battery storage in Virginia. Digital Realty recently signed a 10-year PPA with ENGIE in Germany to support a new solar photovoltaic project and 15-year wind power contracts in France.13 Equinix’s global PPA program makes key metros energy-ready for latency-sensitive AI workloads.
There are many reasons renewable energy is often preferred to ramp up electricity supply for the AI revolution. Renewables are faster to build, have become less expensive and have been supported by companies diversifying their energy procurement strategies.14 Solar and wind costs have fallen by approximately 89% and 70% respectively since 2009.15 Public pledges to decarbonize may grab headlines, but for energy-intensive digital infrastructure, power procurement is both a corporate strategy and investment in future energy reliability.
Article by Sarah Adams, Chief Sustainability Officer and co-founder at Vert Asset Management. She leads on engagement. Prior to launching Vert, Sarah worked with finance at institutional asset managers Dimensional Fund Advisors and GMO (Grantham Mayo Van Otterloo). After pursuing an environmental policy and law path, she worked with UK non-profit groups on environmental advocacy in finance including the WWF, Forum for the Future and UnLtd. Seeing a need for retail financial services to engage with environmental and social issues, Sarah started a consulting firm educating financial advisors on sustainable and impact investments in the UK and US.
Sarah has a BA in History from UCLA, a MSc in Environment and Sustainable Development from University College London (UCL), a MA in Environmental Law from SOAS (School of African and Oriental Studies), and a MBA from Johns Hopkins Carey Business School.
Footnotes and Sources:
1. Digital Realty Trust is 5.35% of the Vert Global Sustainable Real Estate ETF (VGSR) as of June 30, 2025.
2. Equinix is 4.57% of the Vert Global Sustainable Real Estate ETF (VGSR) as of June 30, 2025.
3. Lawrence Berkeley National Laboratory. (2024, January). Shehabi, A., Smith, S., & Masanet, E. United States data center energy usage report 2024. Lawrence Berkeley National Laboratory. https://escholarship.org/uc/item/32d6m0d1
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