This funding has allowed new wind/solar projects to reach a level of maturity that makes them competitive with fossil fuels.
The IDTechEx report, “Sustainability for Data Centers 2025–2035: Green Technologies, Market Forecasts, and Players,” revealed that emerging energy solutions, such as small modular nuclear reactors, hydrogen and fuel cells, enhanced geothermal systems, and grid-scale lithium-ion batteries, are now receiving increased investment from the data center sector. With the growing push to focus more on hourly energy adequacy when accounting for energy-based Scope 2 CO2 emissions, carbon-free energy sources without the intermittent nature of wind/solar are needed. While these emerging energy technologies are currently more expensive than fossil fuels, the next step for grid decarbonization is to signal demand for carbon-free power generation with higher capacity factors and/or energy storage.
Most new solar/wind installations today have a lower LCOE (levelized cost of electricity) than fossil fuels, but this wasn't the case just a decade ago. For data center hyperscalers with the capital to invest in sustainable, future-proof operations, there's reason to believe that investing now in early-stage, carbon-free energy solutions can lead to lower energy costs in the long run. IDTechEx forecasts that by 2035, the global data center industry will have saved US$150 billion by using low-carbon energy sources, compared to a fossil fuel scenario (using 2024 as a baseline). Below are some emerging energy technologies expected to play an increasingly important role.
Small modular nuclear reactors
In 2024, data centers spurred a resurgence of interest in nuclear energy solutions. These approaches ranged from reopening large, decommissioned nuclear power plants to pursuing nuclear fusion ambitions and supporting small modular reactors (SMRs). SMRs promise cost reductions and shorter construction times compared to their conventional counterparts by leveraging assembly line production. However, wider adoption will require technical and regulatory advancements, including the development of fuel supply chains and the standardization of international licensing.
Hydrogen and fuel cells
Renewable energy can be converted into hydrogen using electrolyzers and stored for long periods. Fuel cells are advanced energy systems that convert this hydrogen gas into electricity through a chemical reaction with oxygen. Because solid oxide fuel cells have a long lifespan and fuel flexibility, they are well-suited for the continuous power generation required by data centers. Some data centers are already using these solid oxide fuel cells powered by natural gas, with plans to transition to low-carbon hydrogen once the economics and infrastructure make it commercially viable.
Enhanced Geothermal Energy
The number of suitable sites for conventional geothermal power plants worldwide is quite limited. However, the development of enhanced geothermal technologies could significantly increase the number of viable locations. Both Google and Meta support upcoming enhanced geothermal installations that aim to demonstrate commercial viability by deploying technologies from startups such as Sage Geosystems and Fervo Energy.
Grid-scale lithium-ion batteries
Battery energy storage would increase the number of hours per day that data centers can be powered by solar/wind energy. Over the past decade, lithium-ion batteries have become an increasingly important and suitable stationary energy storage technology for grid-scale applications. As these technologies are scaled up, stakeholders are prioritizing different performance characteristics, such as storage duration and energy density.
Perspectives
With US President Donald Trump's recent announcement of a $500 billion investment in AI infrastructure, it's clear that data center growth will continue and that a new generation of power must be deployed to enable it.
Author: Eve Pope, Technology Analyst at IDTechEx.
