SQL knowledge is crucial for Power BI developers because it enables them to interact directly with databases, write queries to extract data, and perform complex joins, aggregations, and filters. SQL skills help developers fetch the right data efficiently from various databases like SQL Server, Oracle, or MySQL, ensuring that the data imported into Power BI is optimized for analysis. Understanding SQL also allows developers to troubleshoot issues, improve data performance, and integrate Power BI with different relational databases seamlessly.