Rural Michigan residents are rallying against the $7 billion Stargate data center planned on southeast Michigan farmland. Protesters claim the data center is being fast-tracked by DTE Energy, the large electric utility, and could raise residential electricity rates and endanger the water supply. The protest took place on 1 December 2025, as captured in a photograph by UCG/Universal Images Group/Getty Images.
Data Centers Drive Clean Energy Growth Amid Climate Concerns
Data centers are driving unprecedented growth in the U.S. clean energy industry, paradoxically boosting a sector that was sputtering before the artificial intelligence boom, even as AI's rollout creates immense environmental challenges. However, observers caution that while the centers are propelling wind, solar, and other clean energy companies, data centers remain a climate nightmare.
Utilities across the U.S. are racing to build new fossil-fuel plants to accommodate the facilities, or are keeping aging gas and coal plants online to meet the staggering demands of data centers. In Michigan and other states, the centers have effectively derailed the grids' planned transitions to renewable energy.
The gas industry is powering much of the data center boom, including fracking firms and pipeline companies. Some gas companies are building new plants solely to serve data centers, and the industry benefits from the Trump administration's support.
However, supply chain snags, regulatory delays, energy generation shortages, and other issues are holding up data centers' connections to the electric grid by as much as 12 years. This delay is forcing big tech to invest heavily in producing its own power through the quickest and cheapest alternatives—battery storage, solar, wind, fuel cells, and similar technology.
“It is unquestionable that the increase in electricity sales is driving an increase in renewables,” said Douglas Jester, a clean energy consultant with 5 Lakes Energy who works in upper Midwest utility regulatory cases. “It’s right to think about it as a paradox.”
The clean energy industry boomed in 2020 as the pandemic drove down interest rates and Joe Biden’s administration made historic investments in decarbonization. But it faltered as inflation hit, projects became expensive, and energy demand remained flat. Then came the second Trump administration, hostile to Biden’s plans and the clean energy movement, canceling government programs that had helped wind, solar, and electric vehicles.
Most clean energy companies’ stocks steadily plummeted from their early 2021 peaks through early 2025, when many began to spike along with data center demand. The iShares Global Clean Energy ETF, which includes about 100 clean energy stocks, fell by around 80% between late 2021 and early 2025, but is up about 52% over the last year.
The industry is also being propelled by increasing electricity demand globally in other industries like oil and gas exploration, as well as sharply falling costs for solar panels, batteries, and other renewable infrastructure, said Lucas Davis, a UC Berkeley energy economist.
But not all clean energy segments benefit equally. Data centers are spurring the development of batteries and solar geared toward powering data centers onsite, but they have little direct benefit on home rooftop solar.
Among companies at the leading edge is Nextpower, a utility-scale solar infrastructure producer, which just reported 20% year-over-year growth and recently purchased data center battery producer Prevalon. Google, meanwhile, developed the world’s largest grid-scale battery to power a data center in Minnesota and purchased an energy company to expand renewable development, including at a new “off the grid” center in Texas that will include wind, solar, batteries, and gas.
“It looks to me like they’re setting up to be vertically integrated to supply their own electricity, and they’ll drive a lot of development,” Jester said.
There is some benefit to the larger grid. In Wisconsin, energy regulators don’t have a renewable energy standard guiding their decisions but are building about 15 wind or solar facilities to accommodate Microsoft and Oracle data centers, though those also include some natural gas, Jester said. “Between the speed to power and the preference by data center companies for clean energy,” the renewables made more sense, Jester added. In Michigan, DTE Energy is building a 330 MW battery system instead of a new gas plant to support a 1.4 GW Oracle data center, which was the only way to meet Oracle’s timeline. The company will pay for the batteries.
Davis stressed that the “huge increase” in demand is largely motivating tech companies, not a benevolent desire to save the planet from climate disaster with clean energy. “I would say tech is desperate for electricity and oftentimes it’s going to whatever is the quickest – it could be the fuel cell, it could be natural gas turbines, or it could be solar and batteries, but the underlying demand is electricity,” Davis said.
An example lies in rising star Bloom Energy, which produces relatively cleaner energy but not renewables. Its solid oxide fuel-cell systems generate power through an electrochemical process that does not emit toxic sulfur oxides, particulate matter, and other dangerous emissions. However, it does emit carbon dioxide, even if its process is more efficient than traditional natural gas turbines. Bloom can deploy its cells in as little as 90 days, drawing intense interest from data center owners. It just announced plans to provide power to Oracle, is doubling its manufacturing capacity by the end of 2026, and its stock is up 1,338% over the last year.
The green growth spurt comes with some big caveats. Energy demand is hard to predict, even if “the forecasts are staggering,” Davis said. The industry may be susceptible to an AI bubble that many observers say could burst at any time. But a portfolio manager who helps oversee BlackRock’s flagship sustainability funds told Bloomberg the sector is well prepared to withstand a turn. “We don’t correlate any potential ‘AI bust’ as an existential risk to sustainable energy equities,” the manager said. “Sustainable energy equities could stand to even further benefit as US rates come down and we see a broadening out of the market.”
