Surveying a year of energy and sustainability developments in the data center sector reveals several clear trends. Chief among them is the renewed emphasis on power availability, driven primarily by the growth of AI-related demand.

A September report from Goldman Sachs Research projected that global power demand from the data center sector could rise by 50 percent by 2027. This, in turn, is reflected in the pipelines of major utilities worldwide. For example, the UK’s National Grid reported that it expects to connect up to 19GW of new capacity by 2031, half from data centers. In the US, a recent Wood Mackenzie report showed that US utilities had committed to connect more than 160GW of new large-load demand. In the PJM Interconnection market alone, 55GW of new demand is expected to come online by 2030, with 100GW by 2037. As a result, S&P Global has reported that data centers across the US will require nearly three times as much grid-based power by 2030 as they did last year.

In response, power providers in the US and further afield have reconsidered fossil-fuel generation, with support for traditional renewables softening. At the same time, there has been growing interest in alternative low-carbon energy sources, most notably nuclear, geothermal, and hydrogen fuel cells, which have seen increased uptake across the sector.

The result has been an increasingly diverse mix of power strategies across the sector, reflecting an “all of the above” approach touted by most utilities in meeting unfettered demand from the data center market.

Nuclear Renaissance

One of the biggest stories in the data center sector this year has been the proliferation of deals with nuclear energy producers. These have ranged from Power Purchase Agreements (PPA) between hyperscalers and large-scale nuclear plants to long-term bets on advanced nuclear technologies.

For the hyperscalers, the focus in the US has been primarily on securing power from operational or recently shuttered nuclear plants. Spurred on by Microsoft’s Three Mile Island deal, signed last year, Meta, Amazon Web Services (AWS), and Google have all signed long-term PPAs to offtake power from nuclear plants.

​AWS signed a PPA with Talen Energy to receive up to 1.92GW of generation from the Susquehanna Steam Electric Station in Pennsylvania through to 2042. The signing of the PPA brought to a close almost a year of dispute over the initial behind-the-meter agreement signed between the two companies, which was rejected by the Federal Energy Regulatory Commission.

Meanwhile, Meta signed a 20-year deal with Constellation Energy to offtake around 1.1GW from the Clinton Clean Energy Center starting in 2027. Most recently, Google partnered with NextEra Energy to restart the shuttered Duane Arnold Energy Center via a 25-year PPA that will supply around 615MW to power its Iowa-based cloud and AI infrastructure once the plant returns online, expected sometime in 2029.

The year also saw the emergence of Fermi America and its planned 11GW energy and data center campus in Amarillo, Texas. The company is planning to develop a hybridized off-grid energy park, comprising natural gas, renewables, and four AP1000 nuclear reactors. The project has faced criticism over its viability, and suffered a blow in December when its first tenant, due to cover $150 million of the campus construction bill, pulled out. Fermi insists talks with the company concerned are ongoing.

While the hyperscalers have snapped up all available capacity from traditional plants, other players have taken a longer-term bet on small modular reactors (SMRs) – miniaturized fission reactors, with capacities ranging from one to 500MW.

Since the turn of the year, numerous data center operators have committed to (mostly non-binding) offtakes with SMR developers, including Data4, Endeavour, and Equinix. The Equinix deal was particularly notable, not only due to its size, totaling more than 750MW of power, but also because it was with three separate SMR developers, all with considerable variations in capacity and technology. The colo provider signed deals with Stellaria and ULC Energy in Europe, and Radiant, a 1MW microreactor developer in the US. DCD did a deep dive into the deal in our latest magazine.

Finally, we saw a renewed interest in fusion power, driven yet again by the hyperscalers. In July, Google signed a 200MW PPA with Commonwealth Fusion Systems (CFS), a nuclear fusion firm, for power from its inaugural ARC plant. The plant has a planned capacity of 400MW, and is projected to deliver its first power to the Virginia grid in the early 2030s. Google also has the option to offtake additional power from future ARC plants.

The major caveat for both the SMR and especially the fusion sector is the question of commercialization, with SMRs only expected to come online in the mid-2030s, and fusion even later (if ever). Data center operators have argued, however, that by backing the technology now, they are providing it the support it needs to reach commercialization, with the offtakes acting as a form of annuity.

Renewable downturn

2025 has been a mixed bag for the renewable energy sector.

Outside the US market, the sector has continued to flourish, with data centers retaining their position as the world’s largest offtakers of low-carbon power. This was especially apparent in Europe, where sustained demand driven by AI saw companies across the continent sign several deals via long-term PPAs, especially in Spain, Italy, and the FLAPD data center markets.

Notable deals include a 138MW PPA signed by Apple Italy, Google’s 35MW wind PPA with Exus in Spain, and Amazon’s 472MW PPA with OX2 in Finland.

There was also an uptick across the Asia Pacific market, especially in Japan. Microsoft signed its second PPA in the market, inking a 100MW solar PPA with Shizen Energy. Google also signed its second PPA in Japan, inking a 15MW deal with Jera. Finally, Equinix got in on the act, signing its first PPA in the country, agreeing to a 20-year deal for 30MW of power.

In the US market, however, the sector has been rocked by the Trump administration, which has removed many of the incentives brought in as part of the previous administration’s Inflation Reduction Act (IRA). This culminated in the passing of “The One Big Beautiful Bill,” which stripped most tax credits for the sector. The bill imposed a 50 percent tax on wind projects and a 30 percent tax on solar projects completed after December 2027, if they cannot prove they haven’t used Chinese components. For other projects seeking to claim clean electricity tax credits, the phase-out of the credits would begin for construction after 2032, regardless of the IRA’s emission reduction targets.

Despite the less-than-supportive administration, data center firms in the US continued to sign renewable power agreements, with the hyperscalers again leading the way. For example, in December, Meta signed 2.5GW worth of PPAs with NextEra Energy to support its US operations, to go with several other PPAs it signed across the country. Google inked several PPAs in the US, including a 15-year PPA with TotalEnergies in Ohio, and AWS continued with its aggressive clean power strategy in an effort to maintain its top spot as the largest corporate buyer of renewables.

Fossil power

The Trump administration’s anti-renewable stance has fed into its open and enthusiastic support of the fossil fuel industry. Since his inauguration, President Trump has signed off on a series of measures to support the fossil fuel sector, with coal in particular receiving notable support, through several executive orders. As a result, in September, US Energy Secretary Chris Wright said the administration now expects most of the country’s coal-fired power plants to delay retirement to help meet energy demand from the AI data center sector.

Support for coal stands in stark contrast to the fuel’s steady decline over the past quarter-century. The fuel share in the US energy mix has fallen to around 15 percent, compared with 2001 levels, when it accounted for 51 percent of the US’ energy.

​While coal has dominated the headlines, natural gas has emerged as the go-to option for many data center developers looking to expedite their route to power.

NRG’s 5.4GW agreement with GE Vernova was the year’s biggest move, proposing four new gas-fired projects designed to serve fast-growing data center clusters. In Texas, CloudBurst signed a ten-year supply deal with Energy Transfer, securing up to 450,000 MMBtu per day of gas for its San Marcos campus.

No company was as aggressive as HPC data center developer Crusoe, which secured 4.5GW of gas-fired capacity through a joint venture with Engine No. 1 and placed orders for 29 GE Vernova turbines to add nearly 1GW of self-contained generation for its AI campuses. The company also advanced plans for a 1.8GW Wyoming site tied directly into regional gas infrastructure.

While natural gas remained all the rage, supply chain cracks began to show. Three companies- GE Vernova, Siemens, and Mitsubishi Heavy Industries (MHI)- currently produce the majority of gas turbines globally. However, it was reported that they were struggling to meet surging demand from the data center market, with delivery backlogs stretching past 2029. In response, MHI announced plans to double its gas turbine production capacity over the next two years in response to surging demand

Outside of the US market, several European developers have looked towards natural gas as an option to circumvent the constrained grids prevalent across the continent. The most notable deal saw CyrusOne partner with E.ON to deploy an on-site gas-fired power system at its FRA7 data center in Frankfurt, Germany. The power plant will have a capacity of 61MW and will allow CyrusOne to expand the campus by almost half.

Emerging technologies

2025 has also seen the growth of emerging technologies within the data center sector. One power option to gain momentum was geothermal power. In a recent report by the Rhodium Group, it was claimed that enhanced geothermal systems – an advanced form of geothermal production – could meet a large proportion of new data center demand in the US. Last year saw several deals between hyperscalers and EGS developers, and that momentum has carried over into this year. In June, Meta signed its second geothermal deal, inking a 150MW agreement with XGS Energy in New Mexico. Google also got in on the act, signing a PPA with Baseload Capital for 10MW of conventional geothermal power in Taiwan. DCD explored this and more in DCD>Magazine #58.

Energy storage systems also saw increased uptake, with several data center companies signing deals with long-duration storage firms. Google signed its first long-duration storage deal in July, partnering and making a direct investment in Energy Dome, an Italian CO2 battery developer. It was subsequently reported that Google would deploy the batteries in partnership with Salt River Project as part of a research project to test the product’s feasibility. AI data center developer Prometheus Hyperscale also signalled backing to the sector, signing a deal with organic flow battery developer XL Batteries to deploy a pilot project at an undisclosed site, with an option to pursue a commercial deployment.

​Finally, fuel cells grew in popularity, primarily on the back of Bloom Energy, a developer of solid oxide fuel cells. The company began the year by expanding a supply agreement with Equinix to deploy 100MW of its fuel cells across 19 US data centers. It followed this up with its first deal with a US cloud provider, signing a deal with Oracle in July to deploy fuel cells across “select data centers,” with deployment expected within three months of the deal’s announcement. The year culminated in a $5 billion AI infrastructure partnership with Brookfield, which will support the deployment of its fuel cells in AI data centers worldwide.

Keeping things sustainable

With energy dominating the headlines, many operators continued to advance sustainability efforts, made even more important by the increased carbon intensity of their operations. A growing issue within the sector has been its Scope 3 emissions, which often account for between 40-70 percent of a facility’s total footprint, mostly emanating from construction, embodied carbon in materials, and the manufacturing of servers and AI hardware.

To offset this, data centers have been investing in sustainable building materials. Noted projects included Meta piloting mass-timber construction on its US data center campuses, starting with an administrative building in Aiken, South Carolina, and expanding to Wyoming and Alabama. Microsoft signed cement supply agreements with low-carbon cement producer Sublime, and announced plans to build new data centers in Northern Virginia using a hybrid of cross-laminated timber, steel, and concrete. In addition, Microsoft also signed a 2025 supply agreement with Stegra for near-zero emission steel, including environmental-attribute certificates for future data center construction.

The carbon removal market continued to grow in 2025, with Microsoft once again the largest purchaser. The hyperscaler signed a range of carbon removal deals, including multi-million-ton reforestation agreements with Re.green in Brazil, Chestnut Carbon, EFM, and technology-based removals with enhanced rock weathering firm Terradot and carbon sequestration partnerships with CO280 and Vaulted Deep.

Google maintained a steady but more targeted buying strategy, reporting roughly $100m in removal spend over the previous year, and backing projects focused on methane and refrigerant destruction through Recoolit and Cool Effect. It also continued participating in multi-buyer procurement through the Frontier consortium, alongside Meta, Stripe, and Shopify, which signed several major removal agreements in 2025.

While progress has been notable on offsets, concerns remain about the long-term effectiveness of the projects, with many expected to deliver carbon credits only by the end of the decade. In addition, some companies, especially those within the carbon capture and storage space, have faced criticism over the cost-effectiveness and efficacy of their solutions in actually delivering verifiable carbon removals.