The One Big Beautiful Bill, approved by Congress in July 2025, accelerated the expiry of tax credits for solar and wind, triggering widespread project cancellations
Decision Lens
The U.S. corporate clean power PPA market is repricing and restructuring simultaneously. Solar and wind contract prices rose 9% year-on-year in Q4 2025, project cancellations have thinned the supply pipeline, and new federal sourcing restrictions are adding compliance risk to storage-heavy deal structures. For global heads of data center energy, the question is no longer whether to act on these dynamics — it is how to sequence procurement, which technology combinations to prioritize, and where co-location with generation changes the calculus.
90-Second Brief
Now, average solar PPA prices in North America reached $61.7/MWh in Q4 2025, up 9% year-on-year, while wind contracts averaged $73.7/MWh, also up 9%, according to LevelTen Energy. The supply-side contraction following the accelerated expiry of tax credits under the One Big Beautiful Bill has amplified price pressure as hyperscaler demand continues to rise. Developers are planning 56 GW of on-site generation for data centers, approximately 30% of all planned data center capacity, signaling a structural shift toward behind-the-meter and co-located supply models. New federal rules restricting Foreign Entity of Concern components, beginning at a 50% ceiling in 2026 and tightening to 15% by 2030, introduce meaningful compliance and timeline risk, particularly for battery storage projects.
What’s Actually Happening
North American PPA prices for both solar and wind rose 9% year-on-year through Q4 2025, per LevelTen Energy data. In ERCOT specifically, wind PPA fair values rose 16% across 2025 and solar rose 8%, driven by rising demand forecasts, a reduction in tax-eligible projects, and supply chain inflationary effects, according to Pexapeak.
The supply contraction has a legislative origin. The One Big Beautiful Bill, approved by Congress in July 2025, accelerated the expiry of tax credits for solar and wind, triggering widespread project cancellations. Consultancy Cleanview counted 1,891 project cancellations in 2025 totaling 266 GW of capacity; 93% were clean energy assets.
Against this backdrop, hyperscalers have shifted from single-asset PPAs toward multi-gigawatt portfolio deals that combine technologies — wind, solar, long-duration storage, and increasingly nuclear and geothermal — to achieve hourly load matching and dispatchability. Engie North America reports that 80% of its U.S. PPA volume is now with technology companies. Google’s February 2026 deal with Xcel Energy for 1,400 MW wind, 200 MW solar, and 300 MW long-duration storage to serve a Minnesota data center illustrates the scale and complexity of current structures.
Simultaneously, 56 GW of on-site generation is in the planning pipeline for data centers — roughly 30% of all planned data center capacity per Cleanview — reflecting operators’ intent to bypass congested interconnection queues and secure direct supply. PJM has introduced faster connection pathways for developers building co-located generation, providing a regulatory mechanism that supports this model.
Smaller corporate buyers have pulled back. Rising prices, tighter sustainability budgets, and macroeconomic pressures including tariffs and inflation have caused many non-hyperscale buyers to deprioritize clean power procurement, concentrating deal flow among the largest operators.
The FEOC sourcing rules add a separate compliance layer. Starting in 2026, no more than 50% of project components may come from Foreign Entities of Concern — a threshold that falls to 15% by 2030. Battery storage developers in particular face difficulty sourcing compliant components within this timeline, according to developer feedback cited in the source reporting.
Why It Matters for Global Heads of Data Center Energy?
The market your procurement function operated in 24 months ago is not the market you are operating in today. Three structural shifts are compounding each other:
Cost floor has moved. Solar at $61.7/MWh and wind at $73.7/MWh are not ceiling prices — they are Q4 2025 averages in an environment where the project pipeline is contracting and demand is growing. EPRI projects data centers will represent 9% of U.S. electricity demand by 2030, up from 4% in 2025. That demand trajectory does not support a reversion to prior price levels absent a significant policy reversal or technology disruption.
Contract structures are more complex and more expensive to execute. Hourly load matching, dispatchability requirements, demand-side flexibility clauses, and multi-technology bundling all increase structuring cost, legal complexity, and counterparty dependency. Teams that lack origination capability or developer relationships at this level of sophistication are at a disadvantage.
Co-location is becoming a procurement category, not an experiment. With 56 GW of on-site generation planned across the data center sector and PJM offering accelerated interconnection for co-located assets, behind-the-meter and on-site generation is moving from strategic option to operational consideration. The ERCOT market, where data center build is accelerating, is a particular focal point.
FEOC compliance is a procurement risk, not just a policy monitoring item. Any storage-heavy PPA structure — including the hybrid wind-solar-storage bundles that now represent best practice for 24/7 CFE matching — carries FEOC exposure that must be assessed at deal origination, not at execution.
The Forward View
The market is unlikely to self-correct on price in the near term. Project cancellations reduce the competitive pressure on developers, and incremental hyperscaler demand will sustain offtake competition. Operators who have not locked in multi-year, multi-technology PPAs are procuring into a tighter market with each passing quarter.
The co-location and on-site generation trend will likely intensify in markets with chronic interconnection constraints. Whether this manifests as utility supply agreements, gas-fired bridge generation, or fully behind-the-meter renewables depends on site-specific grid conditions, but the direction of travel is consistent across operator types.
Technology diversity in PPA structures — nuclear, geothermal, long-duration storage alongside wind and solar — carries a price premium relative to single-technology deals, as acknowledged by developer commentary in the source article. Operators must assess whether the premium for dispatchability and hourly matching is justified by their 24/7 CFE commitments and sustainability reporting obligations, or whether near-term reliability and cost certainty should take precedence.
FEOC compliance timelines for battery storage are a live concern. The 2030 threshold of 15% non-FEOC components will require supply chain restructuring that most developers have not yet completed. Deals signed today with storage components may face delivery risk or cost revision as compliance requirements tighten.
Peer Moves
Google signed a multi-technology PPA with Xcel Energy in February 2026 covering 1,400 MW wind, 200 MW solar, and 300 MW long-duration storage to serve U.S. data center operations including a new facility in Minnesota. Meta has signed seven solar PPAs with developer Zelestra totaling 1.2 GW over the past year, with projects completing between 2025 and 2028. Amazon, Google, Microsoft, and Meta made a public commitment at the White House on March 4, 2026, to fund new energy generation required to power their U.S. data center infrastructure, in part to limit impact on public utility bills.
What We’re Uncertain About?
Several factors in this market carry material uncertainty that should not be treated as resolved:
The degree to which FEOC-compliant battery storage supply chains can be built out before the 15% threshold applies in 2030 is not established. Developer feedback is cautionary, but specific timelines and cost premiums for compliant components are not confirmed in available reporting.
The extent to which smaller corporate buyers return to the PPA market — or whether the market permanently bifurcates between hyperscale operators and a reduced base of secondary buyers — is unclear. Aggregated PPA structures (pool buying) are cited as a mechanism to re-engage smaller buyers, but transaction volume and commercial viability at scale have not been demonstrated at this time.
The net effect of the One Big Beautiful Bill on long-run clean energy supply depends on implementation timelines, potential legal challenges, and whether state-level incentive structures partially offset federal tax credit reductions. The 266 GW of 2025 project cancellations is a reported figure from a single consultancy and has not been independently verified in available sources.
Whether the Trump administration’s broader energy policy direction will accelerate or impede on-site gas generation permitting for data centers — a relevant variable for co-location strategy — is an active regulatory question without a resolved answer.
One Question to Bring to Your Team
Given that FEOC compliance thresholds for battery storage will tighten to 15% by 2030, how are our current and pipeline storage-paired PPA structures assessed for supply chain compliance risk, and who owns that diligence in the deal origination process?
Sources
- Reuters — AI power dash transforms clean energy offtake market (Link)
