The rapid expansion of data centers by tech companies to capitalize on the AI buzz has led to an unprecedented surge in power demand. This growth has been a boon for companies like Nvidia, but it has also driven an extraordinary increase in the power industry.

According to JLL, the power demand of the data center sector is projected to double by 2029. As a result, tech companies and developers are racing to secure power capacity, driving significant investments in various energy sources, including nuclear, natural gas, and solar power.

Although solar energy is intermittent, relying on sunlight to generate power, its advantages have outweighed the drawbacks, leading to a flurry of large-scale deals. In comparison to advanced nuclear reactors, which are yet to be commercially deployed, and new natural gas power plants, which take years to develop, solar power is a proven technology with an average deployment time of approximately 18 months. Additionally, it is one of the most cost-effective sources of new energy capacity.

Since the beginning of 2025, tech companies and data center operators have signed 12 major solar deals, each adding over 100 megawatts of capacity to the grid. This surge in solar investments underscores the industry’s efforts to meet the escalating power demands of data centers.

January

The year started with Meta announcing a 200-megawatt solar deal with Engie, a multinational electric utility. This purchase was allocated to a solar farm near one of Meta’s existing data centers in Texas, contributing to the company’s extensive 12-gigawatt renewable energy portfolio.

Later in January, it was reported by Bloomberg that the Stargate AI partnership, comprising OpenAI, Oracle, and SoftBank Group, would be partially powered by solar energy. SB Energy, a SoftBank subsidiary, is set to develop solar installations supported by grid-scale batteries.

Meta concluded the month with another significant solar deal, this time with Zelestra, a Spanish renewable energy developer, for 595 megawatts of capacity.

February

Meta continued its solar investment streak in February by partnering in a 505-megawatt solar project with Cypress Creek Renewables in Texas. This massive installation is underway in Coleman County, approximately 150 miles northwest of Austin.

Microsoft also entered the solar market in February, adding 389 megawatts of solar power through a deal with EDP Renewables North America. The agreement covers three solar farms, two in Illinois and one in Texas, supporting Microsoft’s commitment to powering its operations with zero-carbon energy.

Amazon made a substantial purchase as well, backing a hybrid project on the Iberian Peninsula that includes wind, solar, and pumped-hydroelectric storage. The deal included 476 megawatts, with 212 megawatts being solar.

Outside the U.S., data center operators have also been investing in solar energy. CtrlS, an Indian company, completed its own 125-megawatt solar facility in two phases. Meanwhile, in South America, Telecom Argentina signed a deal to purchase electricity from a 130-megawatt solar farm developed by MSU Green Energy.

March

Microsoft further expanded its solar portfolio in March with three new developments, focusing on the Midwest. The projects, spanning Illinois, Michigan, and Missouri, are being developed by AES and will provide Microsoft with an additional 475 megawatts of solar power.

Cisco entered the solar scene with a 100-megawatt deal with X-Elio, a solar developer owned by Brookfield. The power purchase agreements involve Cisco buying capacity from two Texas solar projects.

Meta added another 200 megawatts of solar power to its portfolio in March through a deal with RWE. The solar farm will be constructed southeast of Austin.

In Italy, data center operator Data4 signed a 10-year deal with utility Edison Energia to purchase power from a 148-megawatt solar farm northwest of Rome.

More deals likely

The integration of AI into various products and markets has led to rapid data center expansion, necessitating significant power supplies. Given the advantages of solar power, including its cost-effectiveness, quick deployment, and ability to be commissioned in phases, it is well-positioned to meet the escalating power demands of the tech industry.

Utility-scale solar energy is currently one of the most cost-competitive forms of new energy generation, excluding subsidies, and surpasses all sources except onshore wind in terms of cost. Its swift deployment and phase commissioning capabilities enable data centers to access power even before the completion of the entire project.

These factors have conferred a near-term advantage on solar energy, resulting in a flurry of deals with major tech companies and data center developers. This trend is anticipated to persist, underscoring the critical role solar power will play in powering the tech industry’s future growth.