Technology companies are looking at various ways to source electricity for energy-intensive data centers. Google on Dec. 10 unveiled a plan to join with several partners in supporting power generation, as part of what could be a $20 billion investment to develop industrial parks that would have renewable energy and energy storage built alongside those data center facilities.
Google on Tuesday said that it, along with TPG Rise Climate and other investors, would invest in clean energy developer Intersect Power. Intersect, based in Houston, Texas, has raised more than $1 billion in equity and $5 billion in project finance as part of its effort to connect solar, wind, and battery energy storage projects directly to sites that require massive electricity loads.
“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 [artificial intelligence] growth, as well as society’s accelerating electricity demand.”
“Meeting the energy and computing demands of our next generation economy is necessitating the development of new models and partnerships,” said Jim Coulter, executive chairman of TPG and a managing partner of TPG Rise Climate.
Ruth Porat, president and CIO for Alphabet (Google’s parent) and Google, said, “The tri-party partnership brings a new approach that can enable U.S. leadership in AI development, while thoughtfully building data center load next to new additional power generation where possible—reducing both the timeline to operation and the amount of new transmission required.”
Intersect Power already has said it is financing the partnership’s first colocated clean energy project. The facility, whose site has not been disclosed, is expected to come online in 2026 and be fully operational the following year.
$800 Million Equity Investment Round
Intersect Power on Tuesday said it has raised more than $800 million in an equity investment round led by TPG Rise Climate. The round includes investment from Google and others including Climate Adaptive Infrastructure and Greenbelt Capital Partners. Morgan Stanley & Co. acted as financial advisor on the transaction.
Google is among the tech companies, including Meta, Microsoft, and Amazon, working to ensure it has adequate power available to support the continued construction of data centers and AI initiatives worldwide. Google has said its interest in colocating energy resources with its facilities would help ease pressure on the power grid, and speed operational timelines for its data centers. The company said it would be a main customer for the electricity from Intersect Power’s new facilities.
“This means the Google data center would come online alongside its own clean power, bringing new generation capacity to the grid to meet our load, reduce time to operation and improve grid reliability,” Google said in a statement.
Said Porat, “Google’s partnership with Intersect Power and TPG Rise Climate will deliver new clean energy that is purpose-built and right-sized for the data center. When Intersect Power builds new clean energy assets in regions and projects of interest, Google will be able to provide power offtake as an anchor tenant in the co-located industrial park that would support data center development. Once built, this means the Google data center would come online alongside its own clean power, bringing new generation capacity to the grid to meet our load, reduce time to operation and improve grid reliability.”
“AI will strain the power grid, spurring new data center builds in unexpected locations,” said Nick Schweissguth, director of Product and Commercial Enablement at LiquidStack, a Texas-based provider of data center liquid cooling solutions. “The power grid is bracing for an unprecedented challenge as AI data centers’ appetite for power threatens to overwhelm existing infrastructure. This energy crisis will spur action from both utility companies and data center operators.”
Schweissguth told POWER, “Utility companies will embark on massive infrastructure upgrades to meet surging demand, from advanced energy storage to smart grid solutions. Data center operators will adopt a ‘follow the power’ strategy, extending and diversifying new-build locations far beyond traditional locales.”
Scalable Low-Carbon Solutions
Intersect Power, founded in 2016, provides scalable low-carbon solutions to energy customers and is a portfolio company of TPG Rise Climate, which is the climate-focused fund of private equity firm TPG. The Google partnership marks a departure from its grid-connected renewable energy installations, which include 2.2 GW of solar power and 2.4 GWh of battery energy storage in Texas and California.
Intersect’s Project Meitner in Texas is the company’s first colocated initiative. That installation would have 340 MW of solar power and 460 MW of wind power supplying electricity to a 400-MW hydrogen electrolysis facility. Excess power would be sent to the grid.
Energy Innovation, a research group, on Monday in a report wrote that Project Meitner could show ““how large electricity consumers across the country could leverage similar benefits—speed, direct access, shared infrastructure, and credit for clean energy—in an ’energy park’.” The report’s authors wrote, “[T]hese clean energy resources are attracting retail customers and wholesale loads that are willing to assume additional costs, risks and responsibilities that have traditionally been addressed by existing markets and utilities in return for getting faster and cheaper access to clean energy.”
“The convergence of two megatrends—decarbonization and digitization—is creating unique opportunities for innovative partnerships,” said Coulter. “Bringing together a leading carbon-free power producer, one of the world’s largest hyperscalers and the leading private equity investor in climate solutions to capitalize on this opportunity, we are committed to delivering carbon-free data centers at lower cost and greater scale.”
Amanda Peterson Corio, Global Head of Data Center Energy at Google, said, “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 colocating them where possible with the grid-connected carbon-free energy that keeps them up and running. “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.”
—Darrell Proctor is a senior editor for POWER.