For the first time, the digital economy is facing an energy bottleneck, as artificial intelligence and its supporting hyperscale data centers demand excessive compute and power resources. Current US data centers use around 55 gigawatts (GW), representing 4% of the total electricity output, with projections indicating demand could rise to 300 GW by 2030. Notably, Meta plans a 5 GW campus, while overall US grid capacity stands at approximately 1,250 GW.
As a potential solution, solar power is being recognized for its capacity to alleviate the energy demand from data centers. With the cost of photovoltaic systems dropping by approximately 90% over the past decade, solar energy is becoming competitive with traditional sources like coal and natural gas. To satisfy future power demands, the solar industry would need to expand significantly, requiring between 580 and 870 GW of new solar capacity to meet the forecasted 130 GW demand from US data centers by 2030.
Investments in solar technology have the potential to exceed $1 trillion when paired with storage, representing a considerable growth opportunity. Current solar stocks, including SolarEdge Technologies, Nextracker Inc., Sunrun, Array Technologies, and Shoals Technologies Group, are positioned to benefit as the sector stands on the verge of a demand cycle, despite trading at lower valuations after years of underperformance.
