How the AI boom could help ward off a solar slump
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Annelise Capossela/Axios
New data captures the scope of today's U.S. solar boom — and AI could help developers swimming upstream in the Trump era's next stages.
Why it matters: "Data center demand is helping offset some political headwinds for utility‑scale solar," Wood Mackenzie analyst Kaitlin Fung tells me via email.
- Solar is the fastest-growing U.S. power source right now. But analysts have lowered long-term growth projections, thanks to the federal policy U-turn.
Driving the news: Solar generation rose by over one-fourth and met 61% of U.S. electricity demand growth last year, per new tallies from the climate think tank Ember.
- "It met all the rise in daytime electricity demand," states its analysis of U.S. Energy Information Administration data.
- Solar also matched some rising evening consumption as battery deployment expanded.
What's next: Separate EIA data and forecasts show solar generation accounting for 8% of total U.S. power this year and hitting 10% in 2027 — double the 2024 share.
Yes, but: The 2025 GOP budget law hastens the phaseout of federal tax credits for large projects (and they're already gone for home solar).
- Projects must start operating by Dec. 31, 2027, to qualify, unless they start construction by early July this year.
- And Trump officials have pulled back permitting for projects on federal lands or that require other federal approvals.
Threat level: Analysts have trimmed their growth forecasts by varying degrees.
- For instance, BloombergNEF last fall cut its utility-scale solar outlook for 2025-2035 by 25%.
State of play: Rising electricity thirst — from AI, manufacturing, EVs, extreme weather and more — could claw back some lost ground.
- Tech companies can't afford to be too selective as they seek electrons for AI, and many also have aggressive renewables and climate goals.
Catch up quick: The new IPO filing by SOLV Energy, a provider of construction services for solar and battery projects, captures the dynamic.
- It mentions data centers more than a dozen times, including the lead of a section on "market opportunity."
The big picture: Woodmac sees U.S. electricity demand rising nearly 3% annually through 2035, with data centers a big driver.
- This is bullish for solar in multiple U.S. regions.
- "Still, permitting delays, limited labor availability, interconnection, and grid constraints are expected to slow near‑term growth through about 2029," Fung said.
- But she sees faster utility-scale growth in the 2030s, especially in Arizona, Texas, Nevada, Virginia and Florida.
What we're watching: The rising political salience of electricity costs — and what it means for renewables and storage.
- Renewables backers see an opening to make a wallet-based argument.
- The American Clean Power Association just dropped a report that claims meeting demand growth in PJM — the largest U.S. grid region — will cost households thousands of dollars more over a decade if renewables and storage aren't in the mix.
