IDEAS home Printed from https://ideas.repec.org/p/chf/rpseri/rp2629.html

Powering AI: How Do Data Centers Affect Renewable Energy Investment?

Author

Listed:
  • Alexander Heiss

    (Technische Universität München (TUM) - TUM School of Management)

  • Zacharias Sautner

    (University of Zurich - Department of Finance; Swiss Finance Institute; European Corporate Governance Institute (ECGI))

  • Thomas Schmid

    (The University of Hong Kong - Faculty of Business and Economics)

Abstract

This paper examines how the AI revolution affects investment in electricity generation. Exploiting the public release of ChatGPT as a plausibly exogenous shock, we show that power plant investments increase substantially more in regions with data centers than in regions without them. In contrast to the common view that data center growth is primarily supported by gas-fired generation, most of the newly announced capacity comes from renewable power plants and battery storage. A key mechanism behind these effects is data centers' use of power purchase agreements, which enable project-financed renewable energy investments. Furthermore, net-zero climate commitments by hyperscalers act as additional catalysts for data center-related renewable energy investments. These findings suggest that the growing electricity demand from data centers does not necessarily undermine the net-zero transition.

Suggested Citation

  • Alexander Heiss & Zacharias Sautner & Thomas Schmid, 2026. "Powering AI: How Do Data Centers Affect Renewable Energy Investment?," Swiss Finance Institute Research Paper Series 26-29, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2629
    as

    Download full text from publisher

    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6426079
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:chf:rpseri:rp2629. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ridima Mittal (email available below). General contact details of provider: https://edirc.repec.org/data/fameech.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.