Big Tech is rushing to find clean power to fuel AI’s insatiable appetite

The scramble to build AI data centers that require massive amounts of energy is upending the industry’s climate pledges and spurring it to work with power producers to speed development of new clean-energy sources.

In Nevada, Google is teaming up with a utility to buy power generated from heat beneath the earth’s surface. In the Carolinas, Google, Amazon.com and Microsoft are joining with Duke Energy on similar arrangements that could boost technologies such as smaller nuclear reactors.

Another early-stage technology that could get tech industry backing: batteries that store clean power for days, instead of hours.

“In the past, utilities and states maybe had to go it alone," said Lon Huber, Duke Energy’s senior vice president of pricing and customer solutions. “Now this is sort of like the big, ‘Aha!’ We’ve got a new pillar of support."

The agreements reflect the tech industry’s desperation for green energy, which is bringing together two starkly different sectors. Tech companies rely on software and the virtual world for rapid growth. Slow-growing utilities aim to keep rates low and the lights on while dealing with the physical limitations of an outdated power grid.

Tech companies are already the biggest purchasers of wind and solar power, but it isn’t enough to meet the round-the-clock needs of data centers. A search on a generative AI platform like ChatGPT uses at least 10 times the energy as a standard one on Google. Emissions from the global build-out of data centers between now and 2030 could equal about 40% of the entire U.S. economy’s annual emissions, Morgan Stanley estimates.

The demand is already extending the lives of fossil-fuel power plants and setting back U.S. climate progress and optimism. Meta Platforms recently said its emissions last year were about 70% above 2019 levels. Microsoft’s jumped 40% in the three-year period through June 2023. Google’s surged nearly 50% in the four years through December. Chips, materials and power for data centers, plus overall business growth, were big drivers.

The increases come a few years after the companies pledged to slash emissions and show how hard it will be for businesses to make progress on their climate goals.

One potential solution is taking shape in Nevada. Under a proposed new rate structure, a utility owned by Warren Buffett’s Berkshire Hathaway would buy electricity from geothermal startup Fervo Energy, which drills wells to generate power using heat from under the earth’s surface.

Google then would pay a set rate that would cover the difference between the cost of the power and the lower-cost source the utility would have used otherwise. The company would get green energy to help power nearby data centers, as well as more certainty about electricity costs.

“We’re hoping to replicate it throughout the U.S.," said Amanda Peterson Corio, global head of data center energy at Google.

A similar rate structure is being proposed in the Carolinas. Tech companies and steelmaker Nucor would pay higher rates that would help lower Duke Energy’s long-term costs and accelerate the development of technologies such as small nuclear reactors, as well as efforts on long-duration power storage. Getting regulatory approval to pay for such projects only with ratepayer money is difficult.

Meta recently announced a partnership with a startup to develop geothermal power projects, which are largely in the West and Hawaii, in the eastern half of the U.S.

New power sources are starting to be included in utility planning but aren’t expected to start producing power on a large scale for many years.

Tech companies are increasingly looking to nuclear to meet their huge clean-power needs. Microsoft has agreed to buy power for 20 years after Constellation Energy spends about $1.6 billion to restart Pennsylvania’s Three Mile Island, the site of the country’s worst nuclear power accident. Earlier this year, Amazon paid $650 million for a nuclear-powered data center.

Oracle is designing a data center that would be powered by three small modular reactors, Executive Chairman Larry Ellison said on a recent earnings call. “This is how crazy it’s getting," he said.

The companies are also striking deals for new carbon-removal efforts, which could help them neutralize unavoidable emissions. Google recently agreed to pay for 100,000 metric tons of carbon removal to be delivered by the early 2030s by Holocene, a startup that uses chemistry to reduce the cost of trapping carbon in the open air. That is roughly equivalent to the annual emissions of about 22,000 gas-powered cars.

Microsoft has struck recent deals with companies such as oil giant Occidental Petroleum and a startup founded by former SpaceX engineers called Arbor. It is by far the biggest buyer of carbon removal credits.

Over time, tech companies say AI could help them limit emissions by, for example, helping utilities more efficiently deploy renewable power. But it isn’t clear such benefits would come close to making up for the soaring emissions.

“It’s a massive increase that may not be justified by the productivity gains from AI," said Gernot Wagner, a climate economist at Columbia Business School.