The increasing electricity demand from corporate America, especially Big Tech companies, coupled with the retirement of coal plants throughout the United States, is paving the way for a significant opportunity for renewable energy, as stated by UBS. This convergence of trends indicates that the U.S. will require an additional 850 terawatt hours of annual generation capacity by 2030, according to the investment bank. UBS predicts that solar and wind energy will account for 40% and 30% of the power need, respectively, while natural gas will cater to the remaining 30%. In essence, U.S. renewable projects are primarily displacing coal generation, according to a team of analysts led by Jon Windham in a research note to clients.
Corporate Commitments and Sustainable Growth
There is a direct correlation between the increase in corporate electricity demand and financial support for renewables due to the 100% clean energy or 100% renewable commitments from companies. These overlapping trends offer a promising outlook for long-term growth, particularly in utility-scale solar and battery storage. This growth trajectory helps counterbalance the adverse effects of higher interest rates in the U.S. This shift demonstrates a shift towards sustainability and a greener future, with solar energy projected to account for 12.5% of electricity generation by 2030, an increase from less than 6% in 2023, according to UBS estimates.
While major tech companies like Amazon, Meta Platforms, Microsoft, and Google have been pivotal in driving renewable energy growth, the demand extends beyond the tech sector. Companies such as Nike, Pepsi, Starbucks, and others have also set goals to achieve 100% renewable energy usage. The unique aspect of tech companies lies in their increasing demand as they expand data centers, which require significantly more electricity due to artificial intelligence operations. This growing demand presents a substantial market opportunity to provide reliable electricity generation and infrastructure for data centers, as highlighted by the analysts at UBS.
Tech companies are actively engaging in power agreements ahead of their data center expansions. Amazon, Meta, Microsoft, and Google have already secured contracts for 230 terawatt hours of power, according to UBS estimates. This new generation of power is expected to come online within the next two years. The analysts emphasized that a growing portion of renewable projects are financially backed by high-quality, high-growth electricity consumers, signifying a significant shift towards sustainable energy practices in the corporate sector.
First Solar emerges as a top beneficiary in the renewable energy sector, owing to its dominant position in manufacturing solar modules in the U.S. Additionally, other top stock picks highlighted by UBS include the battery company Fluence Energy and Array Technologies, which specializes in manufacturing systems that enable solar panels to track the sun’s position for optimal energy generation.
The escalating demand for electricity from corporate giants, combined with the retirement of traditional coal plants, is creating a ripe opportunity for renewable energy growth in the U.S. This shift towards sustainability not only benefits the environment but also presents significant economic opportunities for companies operating in the renewable energy sector. As corporations continue to prioritize clean energy goals, the renewable energy industry is poised for substantial expansion and innovation in the coming years.