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In this week’s Power Playbook: Data centre power consumption is often viewed as the ‘problem child’ of the energy transition; for investors, however, it may be giving more reasons to spend their money.
By now, we all know how much power the data centre industry demands.
It’s so much that just two weeks ago, the IEA announced an energy and AI observatory after finding in a report that electricity demand from AI-optimised data centres could more than quadruple by 2030.
The numbers are, indeed, mammoth.
And this has sparked increased interest from investors.
For example, in the US, load growth has led to increasing investor confidence. In Spain, in somewhat of an inverse situation, renewable energy sources and their massive supply in the country calls for balancing assets – data centres may be what is needing, helping with grid reliability and perhaps creating an attractive investment landscape at the same time.
Load fuelling demand
According to a June report by troutman, pepper and locke, the US data centre market has been driving up electricity demand.
Fast growing data centre operators, they say, have been looking to source their clean baseload power 24/7, creating this surge.
This was the main of five findings from the international law firm’s report, which investigates the country’s top equity investment trends in the sector.
Private equity investors interviewed highlighted the rapid expansion of data centres as their greatest source of confidence to invest in US energy companies and assets.
In the report, Matt Kestenbaum, managing director at EQT Partners, said the company does not bet on preferred technologies.
Rather, he sees the potential to meet this growing demand with a combination of renewable and conventional power sources.
He said: “We take a lot of confidence in persistent load growth…in the US market. We own a data centre business as well, so I’m spending a lot of time at the intersection of data centres and power.
“Our view is that demand is real, it’s going to be persistent, and it’s going to need an ‘all of the above’ power solution to satisfy that demand.”
troutman, pepper and locke say in their report that such an ‘all of the above’ solution would also align with the Trump administration’s strategy of ‘energy dominance,’ announced in February 2025 to unlock investment in reliable and cheap energy sources.
Kestenbaum added that focusing on long-term trends such as demand growth will insulate private equity investors from short-term political swings at either the federal or state level.
More from the Power Playbook:
UK’s Industrial Strategy promises investment certainty for clean energy – can it deliver?
Financing grid expansion: Overhead versus the ATT side-step
The Iberian use case
On the other side of the coin, and the Atlantic, Spain stands out as an interesting case study.
In November 2024, Aurora Energy Research highlighted the country as an upcoming European hub for data centre investment.
According to a report by the research company, the Iberian Peninsula has been witnessing an oversupply of electricity due to high renewable energy generation relative to demand.
The arrival of data centres can help absorb this surplus energy from the grid and incentivise investment in the sector. Aurora lists key hubs such as Madrid, Barcelona, Zaragoza, Lisbon, and Sines as leading this growth.
Said Christina Rentell, research lead for Iberia and France at Aurora Energy Research: “Following improvements in data centre efficiency, which have reduced energy requirements for cooling, the Iberian Peninsula has become a more attractive location for installing data centre capacity.
“Spain in particular stands out as an appealing location due to its mature PPA market and land availability.”
At the time of their report, said Aurora, data centres accounted for approximately 2.8TWh of electricity demand in Iberia, equivalent to 1% of the global market. This demand is projected to quadruple, reaching 12.8TWh by 2030.
Since the report’s release, however, power reliability, and grid investment, has gained renewed attention.
The April 28 blackout has put the topic of system stability high on the agenda.
It sparked a finger-pointing quagmire between energy companies, the government and the TSO, Redeia; for all, however, it showed the importance of keeping the system in check.
Might data centres be another way to do this, absorbing supply to balance with demand? If so, might this incentivise investment to build out its infrastructure and add demand to a system dependent on renewable sources of energy?
The matter may not be so simple.
According to Aurora, the rising demand for data centres highlights the urgency for collaboration between policymakers and industry to streamline permitting processes, strengthen renewable energy integration, and promote innovations in energy efficiency.
But the market potential may yet prove true.
€100 billion forecast
According to a report from the European Data Centre Association (EUDCA), investment in European data centres is set to exceed €100 billion ($117.8 billion) by 2030, even though access to power remains one of its key challenges going forward.
The report also shows that 94% of electricity consumed by surveyed colocation data centres comes from green energy contracts – where electricity is purchased from a supplier that primarily uses renewable energy sources.
Thus, says the report, colocation and hyperscale data centres in Europe are rapidly transitioning to the use of green power.
With these numbers only set to increase, the Iberian landscape may prove fruitful, incentivising investment by writing data centres into the playbook of grid resilience.
However, for the US, things may be going the other way.
Trump’s Big Beautiful Bill has this week passed in Congress, and the data centre market will most likely undergo a huge shift.
To go back to the report from troutman, pepper and locke, data centre operators have been looking to source their own clean baseload power to manage demand.
With the Bill looking to haemorrhage clean energy credits for sources such as wind and solar, there will be significantly less support for these technologies – alongside batteries – to provide the baseload for data centres.
Rather, operators may have to move to fossil fuels as sources of energy, which of course take longer to build. For sources such as nuclear and enhanced geothermal, says reportage by Vox, the waiting game is similarly lengthy.
But you know what won’t be waiting? AI.
Stay tuned to the Power Playbook as I cover all these developments and their impact on the global energy financing landscape.
Cheers,
Yusuf Latief
Content Producer
Smart Energy International
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