For the nation’s leading tech companies competing for AI dominance, procuring renewable power is becoming more a matter of necessity than preference.

With hundreds of billions of dollars of investments in new power-hungry data centers from Amazon, Microsoft, and Google, the need for more electric generating capacity has never been greater. The supply crunch has grown so dire that the U.S. Energy Secretary and other key stakeholders are now calling for planned data centers to meet their power needs independently rather than draw from the grid.

Natural gas-fired power plants, valued for their dispatchable, always-on capabilities, have typically been among the go-to solutions. But with historically high demand for turbines outstripping inventories, wait times to build new gas plants are projected to stretch past five years. For tech companies rushing to expand their data center hubs, waiting until after 2030 to build a new gas plant is simply not an option. Amid these supply constraints and limited power capacity, about 20% of planned data center projects globally could be at risk of delays, the International Energy Agency has warned.

Renewables - especially when paired with BESS - are emerging as the answer to address the supply scarcity. Indeed, clean energy sources are projected to provide the largest contribution to data center power demand growth globally, increasing by 450 TWh in 2035, more than double the 175-TWh rise for gas-fired generation, according to the IEA.

“This reflects [renewables] broad availability, short development times, economic competitiveness and technology sector procurement strategies,” the IEA said in its report.

Data centers already are big business for renewable PPAs. The IEA estimates that operational, development-stage and announced data centers in the U.S. alone are responsible for wind and solar PPAs totaling nearly 60 GW of capacity.

Wind and solar projects account for 65% of the planned capacity additions this year, compared to about 9% for gas-fired generation, according to data from the U.S. Energy Information Administration. What’s more, market operators like PJM are advancing grid interconnection reforms to streamline the addition of new projects. Renewable developers are also racing to get new projects built in time to secure valuable federal tax credits.

Wind and solar serve as the perfect stop-gap measure to meet surging load growth in the short term, said John Ketchum, president and chief executive officer of renewable giant NextEra Energy, on an earnings call earlier this year.

“We need renewables and storage to meet demand that is here today,” he said. “As we move toward the next decade, we can supplement renewables and storage with natural gas-fired generation and, to a more limited extent, nuclear given the time it will take to develop and build.”

Ketchum noted that wind projects can be built in 12 months, a storage facility in 15 months, and a solar project in 18 months, all far quicker than gas plants.

Heightened demand for power has helped lift PPAs to near 12-month highs in ERCOT. The fair market value for a 10-year as-generated solar PPA for delivery in the North Hub starting in 2028 reached $48.59/MWh on Sept. 29, data from Pexapark showed. That’s up by $6.36/MWh, or 15%, from the low for the period.

But whether developers will be able to seize the opportunity – despite regulatory hurdles created by the OBBBA – is yet to be seen.