Data Centers Are Driving Demand for Renewable Power, EDP Says

(Bloomberg) -- Big technology companies are driving demand for electricity produced by renewable projects as the firms invest in artificial intelligence and data centers, according to EDP SA, a developer of wind farms and solar energy projects in the US and Europe.

“Demand is just so great that what you see is some of these big tech companies just signing up as much supply as they can,” Chief Executive Officer Miguel Stilwell d’Andrade said in a Bloomberg Television interview with Manus Cranny in New York. “Whether it’s wind or solar, it has to be ready to build over the next couple of years. Gas is also something that’s being very much discussed.”

Data centers have high power needs and large technology firms such as Microsoft Corp. have set themselves ambitious clean energy goals. Lisbon-based EDP has signed contracts to sell power from renewable projects to companies including Microsoft.

For the Portuguese utility, the view on power prices and borrowing costs has evolved in the last few months. In May, EDP lowered its target for adding renewable capacity by a quarter to about 3 gigawatts per year in the 2024-2026 period, citing a decline in electricity prices and higher interest rates.

“Power prices are up,” d’Andrade said. “Demand seems to be really surging, very much driven by AI and data centers’ needs. Interest rates are coming down, that’s obviously very important for a very capital intensive business like ours. So in general, the sentiment in the market in relation to renewables has certainly picked up versus the first half of the year.”

While in the past EDP would be competing with many others in bidding processes, it’s now getting contacted by companies seeking to buy output from its projects, according to the CEO.

“What’s happened over the last couple of months is we’ve been getting a lot of inbound calls asking do you have capacity that you can sell us, do you have projects that are ready to build over the next couple of years,” d’Andrade said. “In terms of pricing, we’re talking about pretty healthy pricing.”

US Market

These prices depend on the regions and can be around $60 to $70 per megawatt-hour, he said.

About 40% of EDP’s planned worldwide investment goes to the US, which d’Andrade said is “a very attractive market.” The CEO said he would never rule out acquisitions but that EDP’s “big focus” is on developing its own pipeline of projects.

It’s important for the US administration that will be in office after the election to be able to accelerate “everything relating to permitting and licensing,” d’Andrade said. “One of the big things that is holding up the industry and the build out of this infrastructure is still that administrative burden.”

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