The Energy Stock Nobody Is Talking About -- But Should Be

The U.S. is experiencing a power surge. The emergence of AI data centers will drive a massive increase in electricity demand in the coming years. Power demand by data centers in the U.S. could grow by 100 gigawatts (GW) by 2035. That's more than double the expected 75.8 GW of demand by U.S. data centers this year.

Clearway Energy (NYSE: CWEN)(NYSE: CWENA) is one of the country's largest clean power producers. That puts it in a strong position to capitalize on the country's power surge. Despite that, no one is talking about the energy stock. Here's why more investors should be talking about Clearway Energy.

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A great foundation

Clearway Energy operates 13.6 GW of power generation capacity across 27 states, including wind, solar, battery storage systems, and gas-fired generation. It sells the power it produces under long-term, fixed-rate power purchase agreements (PPAs) to electric utilities and large corporations, including those that operate data centers. Those PPAs generate very stable cash flow for Clearway.

The company pays out a meaningful percentage of its stable cash flow in dividends (a nearly 5% current yield). It uses the cash it retains to invest in additional income-generating clean power assets. Clearway also has a solid balance sheet to support new investments.

A powerful growth profile

Clearway Energy expects to significantly expand its portfolio in the coming years. It anticipates deploying over $3 billion in capital from 2026 through 2029 on wind repowering projects, battery storage additions, drop-down acquisitions from its parent company (Clearway Energy Group or CEG), and third-party acquisitions.

Many of these investments will help support growing demand by data centers. For example, CEG signed PPAs with Alphabet's (NASDAQ: GOOGL)(NASDAQ: GOOG) Google totaling nearly 1.2 GW of carbon-free energy across three states. The company expects to invest over $2.4 billion in these projects to support the growth of Google's data centers. These projects are a significant expansion of its relationship with Google, as Clearway currently provides 71.5 megawatts of power through an existing wind farm in West Virginia.

Those projects to support Google's data center growth are only the beginning. CEG has over 13 GW of projects at various stages of development. CEG established a joint development framework with Quanta Services for co-located energy centers and data centers as part of its strategy to capitalize on the digital infrastructure megatrend. These projects represent significant future drop-down acquisition opportunities for Clearway (with over $1 billion in investment potential by 2030).

Clearway Energy currently has a clear line of sight to grow its cash flow per share at an annual rate of 7% to 8%+ through 2030. That's before factoring in any potential additional third-party acquisitions and co-located digital infrastructure investments. Meanwhile, Clearway has increasing visibility beyond 2030, when it expects to deliver cash flow per share growth within its 5% to 8%+ target range, with additional upside from the data center power investment opportunity.

High-powered total return potential

Clearway Energy expects to grow at or above the high end of its earnings target range through 2030, with the potential to extend that upper-level growth well into the 2030s. That should give it plenty of power to continue increasing its high-yielding dividend. That combination of income and earnings growth could provide Clearway with the fuel to produce robust total returns, potentially making it the talk of the town in the coming years.

Matt DiLallo has positions in Alphabet and Clearway Energy. The Motley Fool has positions in and recommends Alphabet and Quanta Services. The Motley Fool has a disclosure policy.