Can NRG Energy Meet the Surging Power Needs of the Data Center Boom?

NRG Energy NRG is capitalizing on the increasing demand for electricity from data centers by securing new power supply deals and investing in infrastructure to meet that demand. According to an Arizton Advisory & Intelligence report, the U.S. data center market is experiencing significant growth, with the market size expected to reach $308.83 billion by 2030, at a CAGR of 6.78%.

NRG Energy is actively forming partnerships with tech giants and data center operators to ensure a reliable and efficient energy supply for their operations. These collaborations help NRG Energy understand the specific energy needs of the data center industry. 

The company has signed Letters of Intent and project development agreements with data center developers like PowLan and Menlo Equities, aiming to supply significant amounts of power. These deals can potentially scale up to several gigawatts (GW), indicating a substantial commitment to meeting the growing needs of the data center sector. Targeting 400 megawatts of retail supply in the initial phase, these arrangements have the potential to scale to 6.5 GW, with work expected to start in 2026.

NRG Energy has fully dedicated engineering, construction, and offtake structuring teams to execute its tailored data center strategy. The company has increased its order for big gas turbines with GE Vernova Inc. by 1.2 GW to 2.4 GW. This expansion is part of their broader plan to support the growing needs of the AI industry and other technology developments in the United States.

By securing these deals, NRG Energy is positioning itself to benefit from the significant growth in the data center market, which is expected to drive a surge in electricity demand.

Utilities' Potential to Benefit From Data Center Demand

A few additional utilities that stand to gain from the growing demand from data centers are as follows:

Dominion Energy D is experiencing commercial load growth driven by the demand of data centers. The company has nearly 40 GW of data center capacity in various stages of development, including approximately 10 GW of capacity contracted under electric service agreements.

The Southern Company SO is significantly benefiting from the increased demand for data centers. Southern Company has a substantial pipeline of potential data center customers, exceeding 50 GW of incremental load, with a significant portion from Georgia Power.

NRG Stock’s Price Performance

In the past month, NRG’s shares have risen 4.3% against the industry’s 0.2% decline.

The Zacks Rundown for NRG

NRG is trading at a premium relative to the industry, with a forward 12-month price-to-earnings ratio of 18.92X compared with the industry average of 14.59X.
 

The Zacks Consensus Estimate for NRG Energy’s 2025 and 2026 earnings per share indicates an increase of 17.02% and 21.69%, respectively. 
 

NRG currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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This article originally published on Zacks Investment Research (zacks.com).

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