Amid the conflict in the Middle East, a different and unrelated impetus is combining with concerns over fossil fuels to drive adoption of clean energy. The artificial intelligence boom is having beneficial spillover effects for utilities and turning power utilities – particularly clean energy plays – into hot investment picks.
For example, Meta Platforms last month contracted with a solar power startup, Overview Energy, to receive up to 1 gigawatt of solar power captured by satellites in geosynchronous orbit and beamed back to Earth. The startup plans to begin commercial-scale power transmission by 2030.
Industrial-scale orbital solar power generation is an unproven technology. Power has to be beamed by near-infrared systems over 36,000 kilometres to Earthside receivers. Nonetheless, Meta’s readiness to invest in it shows the levels of anticipated power demand from AI-capable data centres.
Meta’s move comes four months after Google joined in a US$462 million investment round for Fervo Energy, an enhanced geothermal energy startup. Other institutional investors in the round included the California State Teachers Retirement System or CalSTRS, and Canada’s CPP Investments.
Fervo Energy plans to bring its 500 megawatt Cape Station power plant in Utah online this year, and has filed for an initial public offering in the US.
Geothermal power is one of the few clean energy areas that is viewed favourably by the Trump administration, apparently because it can lever drilling and fracking technology borrowed from the oil and gas sector. Yet, Fervo Energy proudly advertises itself on its website as delivering “24/7 carbon-free power”.
A research report last month from Brookings Institution cited predictions from the Massachusetts Institute of Technology for data centre power consumption to breach 1,000 terrawatt hours this year, making them the world’s fifth largest energy consumer behind the US and Japan. This power demand is forecast to double by 2030.
Investment analysts are jumping on the opportunities provided by this kind of anticipated growth. Earlier this month, the Motley Fool highlighted two renewable energy stocks, Nextpower and Brookfield Renewable Corporation, as “evergreen plays that could generate big returns over the next few decades”. The stock call pointed to a projection from Grand View Research for the global renewable energy market to expand at a 14.7% compound annual rate to 2033.
All these propositions were in play before the Middle East war drove oil prices higher and underlined the risks associated with hydrocarbon energy dependency. These geopolitical uncertainties should turbocharge an already hot opportunity. Anti-renewables rhetoric from the US administration seems to be doing nothing to slow the charge.
