Energy Executives Rate Power Sources For Data Center Revolution

Groundbreaking for Microsoft hyperscaler data center, one of three in the region, in March 2026 in Bergheim, Germany.

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Electricity demand in the U.S. has been flat for a decade. Not any more. The meteoric rise of data centers and hyperscaler projects will require enormous growth of electrical power in the U.S., China, and Europe, and across the world. But what are these hyperscaler projects, and who will win the fight between natural gas and solar plus batteries to supply the extra power?

The U.S. administration is pushing for natural gas, as part of its ‘drill, baby, drill’ programs, despite the fact that over 90% of new U.S. power in the past few years has been provided by renewables. China, meanwhile, is making and selling solar and batteries on the cheap, and the country’s production of renewable power is surging to unforeseen heights.

What Are Hyperscalers?

Hyperscalers are very large companies that invest in building or expanding data centers in a distributed network worldwide. They are essentially a large-scale cloud service provider with extensive computing and storage resources. The name implies these companies are able to scale their resources up or down to meet demand, whether its trillions of digits or billions of users.

Hyperscalers operate with many separate data centers and thousands of servers, specialized to meet the need for AI infrastructure. Most important, hyperscalers offer access to customers, on-demand, and enable them to run their own AI at reduced cost. A singular advantage is tasks are split by distributed computing, and this allows massive data quantities to be processed quicker and cheaper for the client.

The big dogs in the hyperscaler competition are Amazon AWS, at the top, with 30% of the global cloud infrastructure market. This is followed by Microsoft Azure, and Alphabet’s Google Cloud Platform.

Realities of Power Demand.

A recent report by Reuters finds that almost 60% of senior energy executives name AI and data centers as one of the most significant power challenges over the next 5-10 years. Bearing in mind that overall electricity consumption is enormous, almost 80% of execs think data centers will demand more than 11% of total consumption by 2030. And 38% expect more than 16%.

The report also reveals that North American execs regard the data center revolution as “bigger, faster, and closer” than their European colleagues.

Capital Spending In Recent Years

To get a better idea of the data center revolution, we can compare recent investments in different energy markets. Rystad Energy’s chart shows the stunning increase in capital expenditures in data centers in the past 3-4 years, capping a truly exponential growth. Between 2020 and 2025 data center spending has grown by 600%. It’s clearly the biggest magnet in recent years. It has bypassed upstream oil and gas, and matched investment in total renewables. Since 2015, only solar PV has shown similar exponential growth, but solar has flattened in the last two years.

Rystad argue that new data centers are based on about 100 megawatts (MW) of power supply. These are large infrastructure investments that also need to be built rapidly. Big tech hyperscalers, including Amazon, Microsoft, Alphabet, and Meta, are expected to dominate investments but they also recognize a large role played by AI labs such as OpenAI. The situation is reminiscent of oil majors and national oil companies in the upstream oil and gas sector.

What Will Be The Future Energy Mix?

The Reuters report ranked the opinions of energy execs in regard to which power sources will dominate data centers over the next 5-10 years. The chart shows solar PV leading at 51%, then natural gas at 44%, energy storage at 41%. These top three choices merge to two choices since energy storage is primarily grid-scale batteries that provide a firming mechanism for solar to operate 24/7, and solve the intermittency problem. A hybrid of solar combined with battery storage (BESS) adds up to 92% and clearly dominates the ratings.

Still, natural gas is resilient as number 2 in the chart, even though it costs more than solar and batteries, and there are substantial delays in building gas-fired power plants. Policy support by the U.S. government for oil and gas energy no doubt biased the ratings a bit. This comes out in the report: 54% of North American execs voted for natural gas but just 34% of their colleagues in Europe. On the other hand, 59% of Europe execs voted for solar versus North America’s 43%, and also voted 47% versus 34% for energy storage.

What about the new technologies of small nuclear reactors (SMRs) and geothermal? Overall voting in the chart shows SMR’s at 18% and geothermal at 11%. The executive perspectives run a dismal last in ratings, principally because of cost and delays.

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