Microsoft and Brookfield Ink Historic Clean Energy Deal

In a landmark move for corporate clean energy, Microsoft Corp.(MSFT) has teamed up with Brookfield Asset Management’s (BAM) renewable division to sign the largest-ever corporate clean-energy purchase agreement. Starting in 2026, Brookfield Renewable Partners will supply Microsoft with over 10.5 gigawatts of renewable energy across the US and Europe, an amount of power equivalent to roughly ten nuclear power plants.

This massive deal underscores the growing need for electricity to power data centers and artificial intelligence technologies. As the demand for clean energy soars amid escalating overall energy requirements, technology companies are striving to align their operations with climate goals while catering to the surge in energy consumption.

Estimating the cost of developing 10.5 gigawatts varies widely depending on the type and location of the energy sources. For perspective, constructing this capacity with U.S. solar farms could exceed $11.5 billion, while wind power setups might approach $17 billion, according to BloombergNEF.

Following the announcement, shares of Brookfield Renewable Partners spiked by up to 8.5% in New York, marking their largest intraday rise since mid-November. Microsoft shares also saw an uptick, increasing by as much as 1.6%.

The energy demand in the U.S., particularly from sectors like AI development and data centers, is expected to climb significantly. Last month, Exelon Corp highlighted an anticipated 900% increase in power demand from upcoming data centers in the Chicago area. This trend poses both a challenge and an opportunity for tech giants to boost their power supply without increasing carbon footprints.

Microsoft’s commitment to sustainability is evident in its goal to match all its electricity usage with zero-carbon energy purchases by 2030. The company is investing heavily in AI, viewing the advanced technology as essential for enhancing its cloud computing services.

AI operations require substantial resources, prompting many companies to rely on tech leaders like Microsoft, Google, and Amazon.com Inc. to host AI programs on their cloud platforms. Just recently, Microsoft reported a third-quarter revenue jump of 17%, reaching $61.9 billion, driven largely by the growing corporate demand for cloud and AI solutions. Similarly, Amazon’s cloud unit showcased its strongest sales growth in a year just this Tuesday.

The partnership between Microsoft and Brookfield not only sets a new precedent for corporate power purchase agreements but also opens the door for potential expansion into other regions such as Asia and Latin America. The agreement will primarily focus on wind and solar energy, with the inclusion of other innovative carbon-free technologies.