As we look towards the future of investing in the energy sector, it’s clear that data centers will play a crucial role in driving demand for renewable energy and natural gas. According to a recent report from Mizuho Securities, power demand from data centers is projected to triple by 2030, reaching 400 terawatt hours annually, or 9% of total U.S. electricity demand.
One of the key drivers of this increased demand is the rapid expansion of artificial intelligence technologies, which are powering the growth of data centers across the country. In fact, about 30% of current data center demand is located in the mid-Atlantic region, with Texas following closely behind.
Renewable energy sources are expected to see the most growth, with solar and wind energy leading the way. Solar demand is projected to increase by 7 gigawatts annually, while wind energy is expected to grow by 5 gigawatts per year through 2030. This represents a significant opportunity for companies in the renewable energy space, such as Nextracker and Array. Nextracker, in particular, could see a $4 upside to its current price target of $59 per share, based on generative AI demand.
On the other hand, companies like First Solar may face more uncertainties, particularly around the outcome of the upcoming presidential election and potential changes to the Inflation Reduction Act. Despite this, First Solar could still see upside potential of $17 to its current price target of $274 per share.
In addition to renewables, natural gas is also expected to play a key role in meeting the growing energy demand from data centers. Gas demand is projected to increase by up to 4 billion cubic feet per day by 2030, with potential for further growth if renewable expansion is slower than expected. Companies like EQT Corp, Williams Companies, and Kinder Morgan are well-positioned to benefit from this increase in gas demand.
While there are certainly opportunities in the energy sector related to data center demand, investors should be cautious of potential bottlenecks and uncertainties. New power projects can take up to five years to get permitted and connected to the grid, and regulatory changes could impact the investment landscape. However, with the right strategic approach and a focus on innovative technologies, there are significant opportunities for investors to capitalize on the evolving energy landscape. Stay tuned to Extreme Investor Network for more insights and analysis on the latest trends in investing.