Clean energy for data centers: the rise of PPAs as a secure solution

The proliferation of data centers to meet the global demand for digitalization and artificial intelligence has emerged as a pivotal driver of energy consumption, necessitating renewable solutions to mitigate their environmental impact.

Accounting for approximately 1.3% of global electricity consumption in 2022, data centers are rapidly expanding to accommodate the digital economy’s burgeoning data demands. This growth has spurred a surge in long-term renewable energy contracts, known as Power Purchase Agreements (PPAs).

According to projections by the International Energy Agency (IEA), electricity consumption by data centers (excluding cryptocurrency operations) now surpasses that of electric vehicles and could constitute between 1.5% and 3% of global demand by 2026. This approaches the 4% allocated to primary aluminum production, a notoriously electricity-intensive process.

This escalating demand presents unprecedented challenges for global power grids and greenhouse gas mitigation strategies.

The World Economic Forum reports that artificial intelligence usage alone, currently a minor fraction of the tech sector’s energy footprint, is estimated to account for approximately 2-3% of total global emissions.

In response to these challenges, governments have begun implementing regulations, while technology companies are actively pursuing alternatives to ensure that data centers’ energy consumption has a minimal impact on the planet’s climate.

This energy must be clean, competitive, and reliable—criteria that form the cornerstone of PPAs.

The IEA notes that data center providers are striving to meet their energy needs with carbon-free electricity, leveraging a combination of wind, solar, and battery storage technologies. This shift has significantly propelled the adoption of PPAs within the sector.

A recent BloombergNEF (BNEF) report, published in early 2024, confirms this trend. Globally, corporations publicly announced a record-breaking 46 gigawatts (GW) in solar and wind energy contracts in 2023, marking an approximately 12% increase from the previous record of 41 GW set in 2022.

BNEF attributes this growth primarily to economic improvements in key regions such as Europe, along with corporate clean energy targets, with tech giants leading the charge.

For the fourth consecutive year, Amazon has emerged as the world’s largest corporate purchaser of clean energy among over 200 companies tracked by BloombergNEF. In 2023, the company announced 8.8 GW in PPAs across 16 countries, bringing its total clean energy portfolio to 33.6 GW—a capacity that exceeds the total installed power in Chile.

Tech Giants Spearhead PPA Growth in 2024

In May 2024, Microsoft signed the largest renewable PPA in history, aiming to develop 10.5 GW of solar and wind capacity across the United States and Europe.

In New Zealand, telecommunications giant Spark entered into a decade-long PPA for 63 MW of new solar energy, set to commence electricity supply in January 2025.

Concurrently, AWS acquired 105 MW from a wind farm near Dublin, Ireland, while pledging an additional investment of 800 MW in new renewable projects throughout the country.

Brazil: Emerging as a Data Center Hub

Regulatory constraints in Europe and the United States are making Latin America an increasingly attractive destination for data centers. The region offers an abundance of renewable resources coupled with expansive areas conducive to project development.

In Brazil, installations have grown at an average annual rate of 20.8% between 2013 and 2023, according to the Brazil Data Center Report compiled by real estate consultancy JLL. The country dominates the sector in Latin America, accounting for approximately 40% of new investments in this domain.

Currently, Brazil houses 135 facilities, predominantly concentrated in the state of São Paulo. Mexico, the second-largest market in the region, hosts 50 centers, followed by Chile with 49.

Recently, the Brazilian government commissioned a study to map demand and potential solutions to accommodate the expansion of data centers. Projections indicate that demand from these centers will reach 2.5 GW by 2037, considering only new projects in the states of São Paulo, Rio Grande do Sul, and Ceará.

In August, Atlas Renewable Energy organized the event “The Future of Data Centers in the Energy Transition,” where industry experts discussed the critical role of clean energy for data centers and underscored the role of renewables in corporate energy transitions.

“This is a discourse that both the sector and the country must address with utmost attention. The energy transition of data centers is not only essential but acts as a catalyst for industry growth, potentially positioning Brazil as a global leader in this segment. Today, we begin to delineate possible horizons for this transformation to materialize in the sector. This event provided an excellent opportunity to illuminate the path forward. Atlas is striving to become the preeminent provider of renewable energy for data centers, offering bespoke, long-term solutions,” said Lucas Salgado, Global Director of Strategy and Commercial Planning at Atlas Renewable Energy. “We are convinced that we are the ideal partner for the data center industry, aiding them in achieving their sustainability and competitiveness goals. Brazil offers significant competitive advantages, such as a diversified and renewable energy matrix, coupled with regulatory incentives that foster innovation and sector expansion,” he concluded.

The event featured contributions from Camila Ramos, CEO and founder of CELA, Felipe Hildebrand, partner in Oliver Wyman’s Communications, Media, and Technology practice, Lucas Salgado, Global Director of Strategy and Commercial Planning at Atlas Renewable Energy, and Rogerio Piovesan, Director of Data Center Engineering and Construction at V.tal. Christian Omar, representative of DatacenterDynamics, moderated the proceedings.

Strategic Alliances for Clean Energy Procurement

In an increasingly digitized world, the expansion of data processing and storage centers is inevitable, accompanied by a commensurate surge in energy consumption. However, it is possible to mitigate a significant portion of the impacts on greenhouse gas emissions by ensuring this energy is sourced from clean alternatives.

As with all economic sectors, the future of data centers is inextricably linked to the energy transition, which must be equitable, accessible, and secure—a paradigm shift that necessitates strategic alliances.

By entering into a Power Purchase Agreement (PPA) with Atlas Renewable Energy, technology firms secure far more than merely renewable and decarbonized energy. We provide bespoke solutions that provide cost predictability and supply assurance, while simultaneously aligning with and advancing a multitude of United Nations Sustainable Development Goals.

We believe our focus should be on innovative solutions that integrate technological expansion with sustainability, and we are committed to being part of a more sustainable, more resilient digital economy.

This article was created in partnership with Castleberry Media. At Castleberry Media, we are dedicated to environmental sustainability. By purchasing Carbon Certificates for tree planting, we actively combat deforestation and offset our CO₂ emissions threefold.