Power purchase agreements (PPAs) are evolving into complex risk-sharing structures as hyperscale data center operators trade fixed pricing for physical delivery and grid-bypass certainty. The US solar industry is entering 2026 as the foundational technology for a new era of power demand, even as the sector navigates a volatile federal policy landscape.
For data center operators in the United States, bringing your own generation is becoming essential for project viability.

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As the grid struggles to meet the power requirements of generative AI, the industry is shifting toward energy parks that integrate solar and battery storage behind the meter to bypass sluggish federal interconnection queues.
Annual solar generation in the United States is forecast to grow by 65% between 2026 and 2030, according to Wood Mackenzie analysis. This surge is supported by load growth for hyperscalers, with 160 GW of committed large-load requests in the pipeline. This represents 22% of total peak demand in 2024. In this environment, the structure of a PPA is being rewritten.
Texas is the epicenter of this shift, accounting for over one-quarter of the national data center pipeline. In February 2026, TotalEnergies signed two 15-year PPAs with Google to supply 1 GW of new solar capacity for the technology giant’s Texas operations. The deal covers the 805 MW Wichita and 195 MW Mustang Creek projects, both located west of Dallas.
Marc-Antoine Pignon, vice president renewables US for TotalEnergies, noted that these agreements address the dual challenges of land availability and power supply by enabling large-scale colocation opportunities.
For Google, the projects are a hedge against a tightening supply of reliable electricity. Will Conkling, Google’s director of clean energy and power, said that adding “necessary new generation” to the local system is a top priority to ensure a stable, affordable grid as infrastructure expands.
While demand is surging, uncertainty looms as US solar PPA prices climb for the second straight quarter. LevelTen Energy reports that solar P25 prices – the 25th percentile of lowest-priced PPAs – rose 3.2% in the fourth quarter of 2025, marking a nearly 9% year-over-year increase.
As the market deals with tax credit cuts and safe-harbor deadlines introduced by the One Big Beautiful Bill Act (OBBBA), developers are prioritizing some projects and abandoning others. Pexapark data shows that PPA volumes fell 22% in 2025, and price expectations rose as the pool of bankable projects shrank.
Developers have gained significant leverage, leading to a seller-led market. As tax-eligible projects become scarcer, corporate buyers are more willing to accept higher prices, looser structures, and increased risk-sharing.
Even on the Electric Reliability Council of Texas (ERCOT) – the US electricity market with the most price-competitive power, wind prices have jumped 19% due to the premium on available capacity near data hubs.
Access to power is now the primary obstacle to AI growth, prompting developers to increasingly utilize private wire or direct connect configurations.
By locating generation and storage on or next to data center campuses, operators can avoid the years-long wait for traditional utility grid upgrades. This modularity allows data center developers to pace power generation buildout with the phased construction of the facilities themselves.
Google parent company Alphabet’s acquisition of developer Intersect Power for $4.75 billion in December 2025 highlights this trend toward vertical integration.
Big Tech is no longer content with virtual PPAs and is moving toward physical delivery to ensure that instantaneous power spikes from AI chips do not crash local distribution lines.
The 24/7 carbon-free goals of the hyperscalers have turned battery energy storage systems (BESS) into a core reliability asset. BESS assets can be used to manage the specific fluctuations caused by high-density compute loads. Utility-scale storage installations were up by 27% in the third quarter of 2025.
Battery cannibalization in markets such as ERCOT has lowered merchant arbitrage revenue – charging when energy prices are low and discharging when they are high – but this hasn’t dampened interest in storage-backed PPAs. However, corporate buyers are pausing or adjusting their procurement strategies due to proposed updates to the Greenhouse Gas Protocol Scope 2 standards, which may introduce more stringent accounting for hourly matching (see pp. 62-65).
Beyond domestic policy, tariff uncertainties and ongoing Section 232 investigations are adding direct development costs to the PPA bottom line.
Developers are also awaiting final guidance on Foreign Entity of Concern (FEOC) rules, which are expected to add compliance costs and complicate tax credit qualification.
LevelTen Energy points out that these factors, combined with “harsh” new federal permitting procedures, have stalled substantial amounts of development nationwide. For the global solar and storage industry, the US market is currently a test of resilience.
For the rest of 2026, capital investment is expected to concentrate around data center projects that can show early procurement and clear paths to bypass grid bottlenecks. Despite federal policy volatility, solar and storage remain the only technologies capable of scaling fast enough to meet the 2.9% annual US power demand growth projected through to 2035.
The data center boom has made solar-plus-storage a physical necessity for AI project viability. Whether through 1 GW mega-deals in Texas or modular energy parks in the PJM market, the future of the US grid is being shaped by the very companies that are straining it.
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