Marcus Emadi | Director at Turning Point Capital
CONTENTS
The Most Notable Deals and Trends Across Data Centre Power Procurement
For power procurement in the data centre sector, 2024 proved a landmark year. With energy demand continuing to surge, operators and utilities alike adopted an “all of the above” strategy to meet their growing needs.
As a result, alternative power sources gained traction—nuclear, geothermal, and tidal energy entered contracts with data centres. Meanwhile, concerns over the reliability of renewables prompted a renewed, if controversial, interest in fossil fuels—particularly natural gas—as a short-term solution.
Nuclear Energy Advances
Several hyperscalers made significant moves in 2024 by signing long-term nuclear power agreements for behind-the-metre supply.
In March, Amazon Web Services (AWS) acquired Talen Energy’s 960MW Cumulus data centre campus in Pennsylvania, which draws energy from the adjacent 2.5GW Susquehanna Steam Electric Station.
The acquisition sparked debate around the future of behind-the-metre energy deals. Grid operator PJM proposed an amendment to the Interconnection Service Agreement (ISA), aiming to increase colocated load capacity. However, the Federal Energy Regulatory Commission (FERC) rejected the proposal, citing insufficient justification for such a “unique” arrangement.
Talen has since requested a rehearing, arguing the data centre’s independence from the grid negates potential cost-shifting and reliability concerns. The decision’s outcome could shape future nuclear-backed data centre deals.
Nonetheless, uncertainty hasn’t deterred others. In September, Microsoft signed a 20-year Power Purchase Agreement (PPA) with Constellation Energy to secure 837MW from Pennsylvania’s Three Mile Island. Meta also issued a request for proposals to develop up to 1.4GW of new nuclear capacity.
Small Modular Reactors (SMRs) gained momentum as well. Google, Equinix, and AWS each signed agreements with SMR developers. AWS went furthest—securing deals with Energy Northwest for four advanced SMRs, partnering with Dominion Energy to explore SMR development, and investing directly in Gen IV developer X-energy to enable over 5GW of nuclear capacity by 2039.
Still, challenges remain. With most SMRs unlikely to be operational before the 2030s and doubts surrounding conventional nuclear’s viability for behind-the-metre supply post-FERC ruling, a full-scale “nuclear revolution” is far from certain.
Renewable Procurement
Hyperscalers remained major drivers of renewable energy uptake, mainly through PPAs.
According to an S&P Global report in November, US data centres had contracted 50GW of clean energy by Q3 2024—29GW solar and 13GW wind. Much of this growth occurred in data centre hubs such as Virginia, Texas, and Oregon, bolstered by the Inflation Reduction Act.
Microsoft led the way in Texas, signing two 15-year PPAs with RWE in May to purchase 446MW from the Peyton Creek II and Lane City wind projects.
In Europe, Amazon, Google, Microsoft, and Meta collectively procured over 12GW of renewable power. Spain led the market with 4.7GW—60% solar. Key deals included Apple’s 105MW PPA with ib vogt and Microsoft’s 230MW solar and wind agreement with Repsol.
Spain’s fast-tracked environmental approvals helped catalyse this growth, although it may limit future expansion due to administrative constraints.
The Fossil Fuel Dilemma Infrastructure
Despite record levels of clean energy procurement, many US utilities are still turning to fossil fuels to bridge the gap between soaring demand and lagging supply.
In November, Southern Co. considered extending the life of its 3,450MW Plant Bowen coal facility in Georgia. Similarly, Hallador Energy signed a non-binding agreement to supply coal power to an unnamed data centre developer.
Some utilities are eyeing natural gas as a “less harmful” alternative. Entergy committed to powering a new Meta facility with three gas turbines totalling 2,260MW, while ExxonMobil announced plans for a 1.5GW gas plant dedicated to data centres.
S&P Global estimates data centre gas demand could reach 3 billion cubic feet per day (bcf/d) by 2030—or even 6 bcf/d under more aggressive scenarios.
To bypass grid congestion, some operators are signing behind-the-metre deals with natural gas suppliers. Sharon AI expanded such an agreement with New Era Helium to power its 250MW data centre in the Permian Basin.
With a new, more fossil fuel-friendly US administration expected, these agreements may become increasingly common—especially given North America’s vast gas reserves.
Emerging Technologies
Geothermal energy saw promising developments. Much like nuclear, geothermal offers stable baseload power, albeit at lower capacities.
In May, Microsoft and G42 announced plans for a geothermal-powered data centre in Kenya’s southwest, near the Olkaria plant. With an initial capacity of 100MW, the site is expected to go live within two years. Olkaria is also home to EcoCloud’s ‘Project Eagle’ at the KenGen Green Energy Park.
Tidal energy has also emerged as a potential source. In November, Iron Mountain partnered with SeaQurrent to deliver tidal power to its AMS-1 data centre in Amsterdam from 2027.
Unlike solar and wind, tidal energy offers more consistent baseload supply due to predictable tidal patterns.
Hydrogen news was sparse in 2024, though Keppel Data Centres signed a conditional offtake agreement with Woodside in October to support its Singaporean portfolio.
While these technologies are promising, most remain in pilot stages and are not yet disrupting conventional energy procurement.
Transmission Troubles
Despite surging demand and a slew of energy deals, transmission infrastructure remains a significant bottleneck. With data centre energy use surpassing 10% in at least five US states—and over 20% in Ireland, per the IEA—the grid is under immense pressure.
Virginia’s Joint Legislative Audit and Review Commission warned in 2024 that unconstrained data centre growth could overwhelm the state’s ability to build sufficient generation and transmission capacity. Under such a scenario, average monthly energy use could exceed 30,000GWh by 2040.
To address this, the US Department of Energy launched ten new transmission corridors and committed $1.5 billion to four major grid projects. A $1.2 billion Transmission Facilitation Programme was also unveiled to support nationwide grid upgrades.
Private utilities such as Xcel Energy and CPS Energy have pledged billions more. Still, concerns remain that the pace and scale of investment won’t be sufficient to meet projected demand.
