The artificial intelligence boom is reshaping the U.S. energy landscape in contradictory ways, simultaneously fueling a boom in renewable energy development while also driving new investment in fossil-fuel infrastructure, according to energy analysts and industry data.
“It is unquestionable that the increase in electricity sales is driving an increase in renewables,” said Douglas Jester, a clean energy consultant with 5 Lakes Energy who works in upper Midwest utility regulatory cases. “It’s right to think about it as a paradox.”
The clean energy industry boomed in 2020 as the pandemic drove down interest rates and the Biden administration made historic investments in decarbonization, but it faltered as inflation hit, projects became expensive, and energy demand remained flat. The second Trump administration, hostile to clean energy, canceled government programs that had supported wind, solar, and electric vehicles, according to the report.
Most clean energy companies’ stocks steadily declined from their early 2021 peaks through early 2025, when many began to spike along with datacenter demand. The iShares Global Clean Energy ETF, which includes about 100 clean energy stocks, fell by around 80% between late 2021 and early 2025, but is up about 52% over the last year, the report said.
The industry is also being propelled by increasing electricity demand globally in other industries like oil and gas exploration, as well as sharply falling costs for solar panels, batteries, and other renewable infrastructure, said Lucas Davis, a UC Berkeley energy economist.
But not all clean energy segments are benefiting equally. Datacenters are spurring the development of batteries and solar geared toward powering datacenters onsite, but the boom is having little direct benefit on home rooftop solar, according to the report.
Among companies at the leading edge is Nextpower, a utility-scale solar infrastructure producer, which reported 20% year-over-year growth and recently purchased datacenter battery producer Prevalon.
Google developed the world’s largest grid-scale battery to power a datacenter in Minnesota and purchased an energy company with which it is expanding renewable development, including at a new “off the grid” center in Texas that will include wind, solar, batteries, and gas, the report said.
“It looks to me like they’re setting up to be vertically integrated to supply their own electricity, and they’ll drive a lot of development,” Jester said.
In Wisconsin, energy regulators are building about 15 wind or solar facilities to accommodate Microsoft and Oracle datacenters, though those also include some natural gas, Jester said. “Between the speed to power and the preference by datacenters companies for clean energy,” the renewables made more sense, he added.
In Michigan, DTE Energy is building a 330 MW battery system instead of building a new gas plant to support a 1.4 GW Oracle datacenter, which was the only way to meet Oracle’s timeline. The company will pay for the batteries, according to the report.
Davis stressed that the “huge increase” in demand is largely motivating tech companies, not a benevolent desire to save the planet from climate disaster with clean energy.
“I would say tech is desperate for electricity and oftentimes it’s going to whatever is the quickest — it could be the fuel cell, it could be natural gas turbines, or it could be solar and batteries, but the underlying demand is electricity,” Davis said.
An example of that dynamic lies in Bloom Energy, which produces relatively cleaner energy through solid oxide fuel-cell systems that generate power via an electrochemical process that does not emit toxic sulfur oxides, particulate matter, and other dangerous emissions. However, it does emit carbon dioxide, even if its process is more efficient than traditional natural gas turbines, the report said.
Bloom can deploy its cells in as little as 90 days, which has drawn intense interest from datacenter owners. It announced plans to provide power to Oracle, is in the process of doubling its manufacturing capacity by the end of 2026, and its stock is up 1,338% over the last year, according to the report.
The green growth spurt comes with some big caveats. Energy demand is hard to predict, even if “the forecasts are staggering,” Davis said. The industry may be susceptible to an AI bubble that many observers say could burst at any time.