Datacenters driving US clean energy growth while still threatening climate

Rural Michigan residents rally against the $7 billion Stargate data center planned on southeast Michigan farm land. Protesters say the Data Center is being fast tracked by DTE Energy, the large electric utility, and that it could raise residential electricity rates and endanger the water supply. 1 December 2025 Photograph: UCG/Universal Images Group/Getty ImagesView image in fullscreenRural Michigan residents rally against the $7 billion Stargate data center planned on southeast Michigan farm land. Protesters say the Data Center is being fast tracked by DTE Energy, the large electric utility, and that it could raise residential electricity rates and endanger the water supply. 1 December 2025 Photograph: UCG/Universal Images Group/Getty ImagesDatacentersDatacenters driving US clean energy growth while still threatening climateAs datacenters’ connections to electric grids are held up, big tech is forced to throw money at producing its own power

Datacenters are driving unprecedented growth in the US 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, datacenters remain a climate nightmare.

Utilities across the US are racing to build new fossil-fuel plants to accommodate the facilities, or are keeping ageing gas and coal plants online to meet the staggering demands of datacenters. 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 datacenter boom, including fracking firms and pipeline companies. Some gas companies are building new plants solely to serve datacenters, and the industry has the added benefit of the Trump administration’s support.

However, supply chain snags, regulatory delays, energy generation shortages and other issues are holding up datacenters’ connections to the electric grid by as much as 12 years, and the delay is forcing big tech to throw huge sums of money at 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 working toward decarbonizing the nation. 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, it canceled the government programs that had helped wind, solar, and electric vehicles.

Most clean energy companies’ stocks steadily plummeted in value from their early 2021 peaks through early 2025, when many began to spike along with datacenter 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 the 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 are benefitting equally. Datacenters are spurring the development of batteries and solar geared toward powering datacenters onsite. But it is having 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 growth and recently purchased datacenter battery producer Prevalon.