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Optimal energy portfolio investment strategies for data centers under deep market uncertainty

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  • Abdelhady, Mohamed
  • Iakovou, Eleftherios
  • Pistikopoulos, Efstratios N.

Abstract

Artificial intelligence is driving soaring electricity demand, with data centers projected to account for 44% of U.S. load growth through 2028. Energy planning for data centers requires robust investment strategies amid volatile electricity prices and grid interconnection delays. This study introduces a regret minimization framework, inspired by decision theory and game theory, to optimize energy portfolios for data centers, with potential relevance to other energy-intensive sectors. Using hindsight benchmarks and historical back-testing, the framework employs deterministic optimization and full cross-validation to evaluate portfolio robustness through regret-based metrics. In a hyperscale data center case study, diversified portfolios combining solar photovoltaic (PV), wind energy, and gas turbines demonstrate lower regret than grid-only strategies and provide resilience to evolving regulatory requirements. Reducing grid reliance from 100% to 20% mitigates cost volatility and interconnection risks. Low-carbon technologies, like nuclear small modular reactors (SMR), become viable with reduced capital costs and limited land availability. This work offers a robust planning framework for optimal strategic investments not only for data centers but also for energy-intensive industries navigating the modern, volatile energy landscape.

Suggested Citation

  • Abdelhady, Mohamed & Iakovou, Eleftherios & Pistikopoulos, Efstratios N., 2026. "Optimal energy portfolio investment strategies for data centers under deep market uncertainty," Applied Energy, Elsevier, vol. 410(C).
    • Handle: RePEc:eee:appene:v:410:y:2026:i:c:s0306261926001625
    DOI: 10.1016/j.apenergy.2026.127510
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