Investors looking to benefit from the artificial intelligence power boom often focus on emerging energy companies such as advanced fuel-cell maker Bloom Energy (NYSE:BE) and small modular reactor developer Oklo (NYSE:OKLO). Bloom has major AI partnerships with Oracle and Brookfield, while Oklo has agreements with Meta Platforms and Switch.
However, renewable power producer Clearway Energy (NYSE:CWEN) is receiving far less attention despite its growing role in supplying electricity for data centers. Its parent company, Clearway Energy Group, has signed a nearly 1.2-gigawatt (GW) agreement to develop renewable power for Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL). Clearway is also securing significantly higher prices for electricity from some legacy assets as hyperscalers seek reliable power for their energy-intensive operations.
Clearway Energy is benefiting from rising AI power demand
In January, Clearway Energy Group signed three long-term power purchase agreements (PPAs) with Alphabet’s Google covering nearly 1.2 GW of projects intended to support its data centers. The projects represent more than $2.4 billion in planned energy infrastructure investment, with the first facilities expected to enter service in 2027 and 2028.
The agreements significantly expand Clearway’s existing power relationship with Google, which currently includes a 71.5-megawatt (MW) project in West Virginia.
Clearway Energy is not initially investing directly in all of these projects, but it expects to acquire some of them in the future. The company has agreed to purchase Goat Mountain, a wind repowering project in Texas supported by a Google PPA, from its parent company when the facility begins commercial operations next year. Clearway has also identified Swan Solar and Catamount Wind, two other Google-linked projects, as potential acquisition targets in 2028.
The Google agreements are not the only important development. Clearway recently signed more than 600 MW of PPAs extending the contract lives of wind farms it is repowering through 2041. The customers include two hyperscalers and another commercial and industrial customer. The agreements feature fixed prices that are more than twice the previous contracted or merchant pricing.
Those deals indicate that Clearway’s existing renewable assets are becoming more valuable as AI-related electricity demand accelerates. The company also has a substantial opportunity to renegotiate contracts as its legacy PPAs expire.
New growth opportunities could emerge after 2030
Clearway Energy Group’s Google-linked drop-down projects represent only a small portion of its potential development pipeline. The parent company currently owns or controls a 32 GW pipeline, creating a long-term source of potential asset acquisitions for Clearway Energy.
Clearway has committed to or identified 3.5 GW of investment opportunities through 2028, representing approximately $1.3 billion. These drop-down transactions allow Clearway Energy Group to recycle capital into new renewable energy projects, including facilities designed to support AI data centers.
Together, the company’s renewable development pipeline and contract-renewal opportunities provide a foundation for growth. Clearway currently expects cash available for distribution (CAFD) per share to grow at the upper end of its 5% to 8% or higher target range through 2030, with growth likely to continue within that range in 2031 and beyond.
Another potential growth driver is co-located digital infrastructure power. Clearway Energy Group is developing more than 17 GW of projects across five sites to provide on-site generation for data center campuses. The company sees an opportunity for Clearway Energy to invest more than $1 billion around 2030 to support the strategy.
The first project, located in Wyoming, is targeting an in-service date in 2029 and is expected to reach its full capacity of 3 GW to 4 GW in 2030.
Clearway Energy offers a different AI power investment profile
Clearway is not a typical AI power stock. Bloom Energy is expected to post 100% revenue growth this year, while Oklo’s investment case is focused largely on future growth because it currently generates relatively little revenue. That potential has also contributed to significant volatility: Oklo is down 75% from its 52-week high, while Bloom Energy’s share price is more than 35% below its peak.
Clearway Energy has been less volatile, declining about 20% from its recent high. Its long-term PPAs provide greater cash-flow stability, and the company pays a dividend currently yielding more than 5.5%.
Clearway expects its dividend to grow and become more sustainable in the coming years. The company projects CAFD per share will increase from $2.12 last year to a range of $2.90 to $3.10 or higher by 2030. With an annualized dividend of $1.90 per share, Clearway can continue raising its payout while moving toward its long-term target CAFD payout ratio of less than 70%.
This combination of cash-flow growth and dividend income could enable Clearway Energy to generate double-digit average annual total returns.
Risks investors should consider
Clearway Energy is not risk-free. The company recently reduced its 2026 CAFD outlook because strong weather patterns associated with El Niño have affected wind generation in the United States. Its growth also depends partly on acquiring assets from Clearway Energy Group on fair terms.
Even so, accelerating electricity demand from AI data centers could allow Clearway Energy to grow at or above its long-term target range for years to come.
Clearway Energy’s role in the AI power boom
Clearway Energy is not developing a new energy technology like Bloom Energy or Oklo. Instead, it is expanding an established clean-energy portfolio backed by long-term PPAs. That portfolio is becoming more valuable as hyperscalers compete for dependable electricity.
Clearway plans to continue growing its portfolio by acquiring renewable assets from its parent company and third parties. For investors, those assets could support relatively steady cash flow and dividend growth while the company expands its exposure to the AI-driven power market.
Source: finance.yahoo.com
