Pairing Data Centers with Renewables and Batteries: Google & Intersect Power Partnering on Co-located Projects
The rise of AI and the data cloud are driving new energy investments unrivaled since the heyday of the 20th century industrial buildout in the U.S. and world.
Internet technology giant Google is going to partner with developer Intersect Power and sustainability investor TPG Rise on creating co-located data centers and renewable energy infrastructure in numerous projects over the coming years.
The trio is aiming for several gigawatts of new data center capacity in this age of expanding artificial intelligence (AI) training and cloud-based facilities. The data center construction will be matched by close to $20 billion in renewable power infrastructure built alongside the new projects.
Using Clean Energy to Realize AI Promises
The first phase of the first co-located clean energy project is expected to be operational by 2026 and fully complete in 2027, although the release did not specify where the site was located. Google, TPG Rise Climate and other investors also are making an $800 million capital investment in Intersect Power.
“To realize AI’s potential, the growth in electricity demand must be met with new, clean power sources. The scale of AI presents an opportunity to completely rethink data center development — by co-locating them where possible with the grid-connected carbon-free energy that keeps them up and running,” said Amanda Peterson Corio, Global Head of Data Center Energy at Google, in a statement. “We’re bringing this opportunity to life by combining pioneers at the intersection of data centers and clean energy development to synchronize load growth with new power generation in a novel way. We hope to replicate this model in multiple markets across the U.S. and around the world.”
The stunningly accelerated pace of new data center capacity needs—driven both by the rise of AI and cloud-based servers meeting the data needs of a decentralized workforce which expanded during the COVID pandemic—has caught power utilities a little off-guard. The fear of lagging utility grid power has also sparked renewed interest in microgrids and small modular reactor nuclear technologies from tech firms such as Google, Microsoft, Oracle and Amazon.
Not to say the utilities are not trying to meet the dramatic increase in future data center load. Midwest utility American Electric Power has reported some 15 GW in financial load commitments from data and AI firms, while Google was among the tech giants recently signing on to the proposed agreement with AEP to financially commit to new power infrastructure expansion.
Value Proposition: Using Distributed Energy to Avoid Transmission Overspend
New utility power will also require new transmission and distribution investment, likely costing in the billions and perhaps trillions of dollars. Some energy industry firms see more potential for distributed, co-located and microgrid-type facilities paired with the next-gen data center capacity.
Intersect Power is calculating that co-located renewables, which can be solar photovoltaic panels paired with large-scale battery storage, can help bridge the gap while avoiding expensive transmission new builds.
“This partnership is an evolution of the way hyperscalers and power providers have previously worked together. We can and are developing innovative solutions to expand data center capacity while reducing the strain on the grid,” said Sheldon Kimber, CEO and Founder of Intersect Power. “Deep, collaborative partnerships combined with creative problem-solving are the only way that we can meet the explosion of AI growth, as well as society’s accelerating electricity demand.”
Online retailer Amazon recently posted a strategy report indicating its support for future investment in small modular reactors (SMRs) and additional conventional nuclear power plants. Facebook parent Meta also published a request for proposals to develop SMRs by the early 2030s.
The economic potential of AI in the U.S. alone, accelerating business transformation, could deliver more than a trillion dollars of gross domestic product impact by 2030, Ruth Porat, president and chief investment officer at Google and its parent company, Alphabet, wrote in a blog this week.
The electrification of the next-gen, fully digitalized American economy both creates opportunities and challenges.
“There is the upside from two additional catalysts for the U.S. economy and job creation: first, onshoring of manufacturing operations and second, the electrification of the transport, heating and cooling sectors,” Porat added. “These profound opportunities require expanding electricity capacity with reliable, secure power sources. But to capture the upside, the public and private sector each need to do their part to support the development of job-creating power infrastructure.”
Intersect Power specializes in grid-tied distributed energy resources serving both commercial and industrial customers. Earlier this year, the company announced an agreement with battery technology firm Tesla to contract for more than 15 GW of battery storage capacity to be pair with solar at projects in California and Texas.
To support the future growth trajectory of Intersect Power’s planned projects, an $800 million funding round was led by TPG Rise Climate and Google with participation from Climate Adaptive Infrastructure and Greenbelt Capital Partners.
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