We previously reported that U.S. electricity prices have been rising, largely driven by the proliferation of AI, high-performance computing (HPC) data centers, and clean energy generation. Residential electricity prices in the United States have jumped nearly 40% since 2021, with states with the highest concentration of data centers seeing the largest increase. To wit, Virginia – the state with the most data centers (666) – has seen electricity prices rise 13% this year compared to 2024 levels, the second highest rate nationally after Illinois’ 15.8%. Illinois has 244 data centers, the fourth largest among the 50 states. It’s no surprise that tech tensions are growing, with various politicians criticizing the Trump administration for cutting sweetheart deals with big tech companies and forcing consumers to subsidize the cost of data centers.
And now, Big Tech is deploying a new tool to curb rising energy costs: energy trading. A new job posting revealed that Walt Disney (NYSE: DIS) is looking to hire a full-time energy trader who will be based in Orlando, Florida, home to the famous Walt Disney World Resort. The trader will be responsible for obtaining favorable prices by purchasing power on an hourly and daily basis. But Disney is just the latest in a growing trend in which large companies, especially big tech companies, are turning to electricity trading as a proactive measure to manage their energy costs. Large companies are starting to operate more like energy companies, quietly building in-house trading, hedging and procurement teams to manage soaring energy costs and volatile electricity markets, instead of following the traditional route of using brokers to strike multi-year, fixed-price contracts. Together, these companies are creating a new class of energy players: large off-takers who trade, hedge and buy electricity with a level of sophistication once limited to utilities and commodity companies.
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Metaplatforms (NASDAQ:META) recently filed with US federal regulators (through a subsidiary called Atem Energy) to obtain authorization to become an electricity trader and engage in electricity wholesale trading. By becoming a direct market participant, Meta can sign long-term take-or-pay contracts with developers of new power plants, including wind, solar and natural gas. Entering the commerce sector gives Meta the flexibility to manage unpredictable supply. If a data center consumes less energy than expected or market prices are favorable, Meta can resell excess electricity into the wholesale market, thereby managing costs and risks.
Other tech giants such as Amazon (NASDAQ:AMZN), Alphabet (NASDAQ: GOOG) and Microsoft (NASDAQ: MSFT) now operates large-scale energy market desks to hedge exposure to deregulated grids, while retailers like Walmart and Target manage structured electricity contracts at thousands of locations. Hospitality and theme park operators, including Marriott (NASDAQ:MAR), Hilton (NYSE: HLT) and Universal Theme parks, operated under Comcast (NASDAQ: CMCSA), have developed similar capabilities to stabilize costs associated with 24/7 operations.
Renewable energy CAE
That said, the rise of AI and rising electricity demand are likely to become a major tailwind for the renewable energy sector. According to a recent report from the Clean Energy Buyers Association (CEBA), corporate buyers purchased more than 100 gigawatts of clean energy between 2014 and 2024, or 41% of all renewable energy capacity added to the grid during the period. CEBA says these corporate buyers are not only trying to achieve stable electricity prices for 20 years or more, but are also motivated by goals to reduce carbon emissions.
Microsoft has really taken its renewable energy bets to a new level in 2024 after the tech giant signed for more than 10.5 GW of clean energy capacity in the US and Europe, the largest renewable power purchase agreement (PPA) ever by a company. Bloomberg NEF estimates that building Microsoft’s clean energy portfolio will require nearly $12 billion, with construction expected to begin in 2026.
Last year, Amazon signed three nuclear energy deals to power its operations. Then, in September, Amazon Web Services and Gentari signed a PPA to build an 80-megawatt wind power project in Tamil Nadu, India. Through this project, the companies plan to generate 300,000 megawatt hours of renewable energy per year, with the plant expected to be commissioned from mid-2027.
Offtake agreements are ideal for the clean energy sector because they significantly improve the revenue visibility and financial health of renewable energy projects. According to CEBA, virtual power purchase agreements (VPPAs) for corporate renewable energy procurement reduce the number of projects facing financial difficulties by 90% in regions served by MISO (Midcontinent Independent Systen Operator) and PJM and by 80% in ERCOT (Electric Reliability Council of Texas). This is important under the current Trump administration, as the United States is poised to lose 100 GW of solar and wind projects planned after OBBBA’s passage.
By Alex Kimani for Oilprice.com
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