Solar notches another win as Microsoft adds 475 MW to power its AI data centers

Microsoft is adding another 475 megawatts to its already considerable renewable-powered portfolio to feed the growing energy appetite of its data centers. The company recently signed a deal with energy provider AES for three solar projects across the Midwest, one each in Illinois, Michigan, and Missouri.

The ramp up reflects the immediacy of Microsoft’s needs. When it comes to powering data centers, it’s hard to argue with solar. Quick to install, inexpensive, and modular, it’s a perfect fit for tech companies that need electricity now.

Microsoft has been tapping solar with some regularity. In February, it contracted 389 megawatts from three solar projects across Illinois and Texas. And late last year, the company announced it was anchoring a $9 billion renewable power coalition that’s organized by Acadia. The Redmond-based company’s own renewable portfolio already includes over 34 GW of capacity.

While tech companies have shown increasing interest in nuclear power in recent months, the cost and speed advantages of renewables have kept solar deals flowing.

Though renewable power on its own doesn’t have the same consistency as nuclear or natural gas, developers are increasingly pairing it with battery storage to provide around-the-clock electricity.

The combination is more expensive than solar or wind on its own, but given the rapid declines in cost for both solar and batteries, so-called hybrid power plants are beginning to encroach on prices for a new natural gas generating capacity. 

So far, new nuclear prices have remained significantly higher than either renewables or natural gas power plants.

For tech companies and data center developers, time is of the essence. Demand for new computing power has risen at such a rate that up to half of all new AI servers could be underpowered by 2027. Most new natural gas and nuclear power plants aren’t scheduled to come online until several years after that.

But renewables can start supplying power quickly, with utility-scale solar projects starting to produce electrons in about 18 months.

That speed has proven attractive, leading to some massive deals: Microsoft, for example, signed a deal with Brookfield Asset Management last summer for 10.5 gigawatts of renewable capacity in the U.S. and Europe, all of which will be delivered by 2030.