By Jinghong Lyu, Senior Associate, Intelligent Mobility and Sisi Tang, China Research Manager, BloombergNEF
Data center operators are actively decarbonizing their power-hungry facilities, driven by their net-zero commitments and emerging government regulations. While a few companies have ambitious goals for round-the-clock carbon-free power, or a direct connect with large-scale renewable energy plants, most are relying on traditional green power procurement to lower their carbon footprint.
- Greening drivers: Data center players are relying on voluntary net-zero commitments and renewable electricity adoption targets to decarbonize their power-hungry operations. Direct regulatory push remains limited. Germany and China have set out clear renewable energy adoption targets, while Ireland requires data center operators to bring sufficient power generation online.
- Co-location: Rising power demand from ever larger data centers also strains the local grid, particularly in data center hotspots. In response, operators are piloting the co-location of data centers and large renewable energy power plants to reduce grid reliance and access cheaper cleaner energy. Despite the potential, volatile generation hinders wider adoption today, leading some US hyperscalers to turn to nuclear power as an option.
- Risks: Today, data center operators mainly decarbonize through green power procurement, with internet giants already accounting for 43% of clean power purchase agreements (PPA) signed in 2024. However, there is a risk that data center operators displace other offtakers without creating any net benefits to the whole power system.
- For more on data centers and power demand, see BNEF’s New Energy Outlook 2025, Global Data Center Power Demand Outlook, US Data Center Outlook: The Age of AI and Data Center Market Overview: Cloud Giants Drive Surge.
BloombergNEF clients can access the full analysis here.
Related Content
