Previously, we reported that U.S. electricity prices have been surging, thanks in large part to the proliferation of AI, high-performance computing (HPC) data centers and clean energy manufacturing. U.S. residential electricity prices have surged nearly 40% since 2021, with states with the highest concentration of data centers recording the biggest increase. To wit, Virginia--the state with the biggest number of data centers at 666--saw electricity prices jump 13% in the current year from 2024 levels, the second highest clip nationwide after Illinois’ 15.8%. Illinois has 244 data centers, the fourth highest amongst the 50 states. Not surprisingly, there’s growing techlash, 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 novel tool to rein in surging power costs: energy trading. A new job posting has revealed that Walt Disney (NYSE:DIS) is looking to hire a full-time energy trader that will be based in Orlando, Florida, home to the famous Walt Disney World Resort. The trader will be responsible for securing favorable pricing by buying power on an hourly and daily basis. But Disney is only the latest in a growing trend whereby big corporations, especially Big Tech, are taking up power trading as a proactive measure to manage their energy costs.
Major corporations are beginning to operate more like energy companies, quietly building in-house trading, hedging, and procurement teams to manage soaring power costs and volatile electricity markets instead of going the traditional route of using brokers to lock in multiyear fixed-price contracts. Together, these companies are creating a new class of corporate energy players--large buyers that trade, hedge, and procure electricity with a level of sophistication once limited to utilities and commodity houses.
Meta Platforms (NASDAQ:META) recently filed an application with U.S. federal regulators (via a subsidiary called Atem Energy) for authorization to become a power marketer and enter the wholesale electricity trading business. By becoming a direct participant in the market, Meta can sign long-term "take-or-pay" contracts with new power plant developers, including wind, solar, and natural gas. Entering the trading business gives Meta the flexibility to manage an unpredictable supply. If a data center consumes less power than expected, or if market prices are favorable, Meta can resell the surplus electricity back into the wholesale market, managing costs and risks.
Other tech giants such as Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT) now run full-scale energy-market desks to hedge exposure across deregulated grids, while retailers like Walmart and Target manage structured power contracts across thousands of sites. 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 tied to 24/7 operations.
Renewable Energy PPAs
That said, the AI boom and surging power demand are likely to become a major tailwind for the renewable energy sector. According to a recent report by the Clean Energy Buyers Association (CEBA), corporate buyers procured over 100 Gigawatts of clean energy deals from 2014-2024, good for 41% of all renewable energy capacity added to the grid over the period. CEBA says these corporate buyers are not only trying to secure stable electricity prices for 20 years or longer but are also driven by goals of reporting lower carbon emissions.
Microsoft really pushed its renewable energy bets to a new level in 2024 after the tech giant signed on for more than 10.5 GW of clean energy capacity in the U.S. and Europe, the largest-ever corporate renewable energy power purchase agreement (PPA). Bloomberg NEF estimates Microsoft’s clean energy portfolio will take close to $12 billion to build, with construction slated to begin in 2026.
Last year, Amazon signed three agreements for nuclear energy to power its operations. Then in September, Amazon Web Services and Gentari signed a PPA to deliver an 80-megawatt wind power project in Tamil Nadu, India. Through the project, the companies expect to generate 300,000 megawatt-hours of renewable energy annually, with the plant expected to come online from mid-2027.
Corporate offtake agreements are great for the clean energy sector because they greatly improve revenue visibility and the financial health of renewable energy projects. According to CEBA, virtual power purchase agreements (VPPAs) for corporate renewable procurement lower the number of projects facing financial distress by 90% in regions served by MISO (Midcontinent Independent Systen Operator) and PJM and 80% in ERCOT (Electric Reliability Council of Texas). This is important under the current Trump administration, with the U.S. set to lose 100 GW of planned solar and wind energy projects after the passing of the OBBBA.
By Alex Kimani for Oilprice.com
