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Originally published in Canary Media by Jeff St. John | February 26, 2025
This is the third article in our four-part series by Canary Media “Boon or bane: What will data centers do to the grid?”
Building dirty power plants to serve the AI boom could spell climate disaster. Luckily there are ways to meet surging demand that are cleaner, faster, and cheaper.
The world’s wealthiest tech companies want to build giant data centers across the United States to feed their AI ambitions, and they want to do it fast. Each data center can use as much electricity as a small city and cost more than $1 billion to construct.
If built, these data centers would unleash a torrent of demand for electricity on the country’s power grids. Utilities, regulators, and policymakers are scrambling to keep pace. If they mismanage their response, it could lead to higher utility bills for customers and far more carbon emissions. But this mad dash for power could also push the U.S. toward a cleaner and cheaper grid — if tech giants and other data center developers decide to treat the looming power crunch as a clean-power opportunity.
Utilities from Virginia to Texas are planning to build large numbers of new fossil-gas-fired power plants and to extend the life of coal plants. To justify this, they point to staggering — but dubious — forecasts of how much electricity data centers will gobble up in the coming years, mostly to power the AI efforts of the world’s largest tech companies.
Most of the tech giants in question have set ambitious clean energy goals. They’ve also built and procured more clean power than any other corporations in the country, and they’re active investors in or partners of startups working on next-generation carbon-free energy sources like advanced geothermal.
But some climate activists and energy analysts believe that given the current frenzy to build AI data centers, these firms have been too passive — too willing to accept the carbon-intensive plans that utilities have laid out on their behalf.
It’s time, these critics say, for everyone involved — tech giants, utilities, regulators, and policymakers — to “demand better.” That’s how the Sierra Club put it in a recent report urging action from Amazon, Google, Meta, Microsoft, and other tech firms driving data center growth across the country.
“I’m concerned the gold rush — to the extent there’s a true gold rush around AI — is trumping climate commitments,” said Laurie Williams, director of the Sierra Club’s Beyond Coal campaign and one of the report’s authors.
Williams isn’t alone. Climate activists, energy analysts, and policymakers in states with fast-growing data center markets fear that data center developers are prioritizing expediency over solving cost and climate challenges.
“I think what we’re seeing is a culture clash,” she said. “You have the tech industry, which is used to moving fast and making deals, and a highly regulated utility space.”
Some tech firms intend to rely on unproven technologies like small modular nuclear reactors to build emissions-free data centers, an approach that analysts say is needlessly unreliable. Others want to divert electricity from existing nuclear plants — as Amazon hopes to do in Pennsylvania — which simply shifts clean power from utility grids to tech companies. Yet others are simply embracing new gas construction as the best path forward for now, albeit with promises to use cleaner energy down the road, as Meta is doing in Louisiana.
Meanwhile, several fossil fuel companies are hoping to convince tech firms and data center developers to largely avoid the power grid by building fossil-gas-fired plants that solely serve data centers — an idea that’s both antithetical to climate goals and, according to industry analysts, impractical.
But a number of tech firms and independent data center developers are pursuing more realistic strategies that are both affordable and clean in order to meet their climate goals.
These projects should be the model, clean power advocates say, if we want to ensure the predicted AI-fueled boom in energy demand doesn’t hurt utility customers or climate goals.
And ideally, the companies involved would go even further, Williams said, by engaging in utility proceedings to demand a clean energy transition, by bringing their own grid-friendly “demand management” and clean power and batteries to the table, and by looking beyond the country’s crowded data center hubs to places with space to build more solar and wind farms.
The basic mandate of utilities is to provide reliable and affordable energy to all customers. Many utilities also have mandates — issued by either their own executives or state policymakers — to build clean energy and cut carbon emissions.
But the scale and urgency of the data center boom has put these priorities on a collision course.
As the primary drivers of that conflict, data centers have a responsibility to help out. That’s Brian Janous’ philosophy. He’s the cofounder of Cloverleaf Infrastructure, a developer of sites for large power users, including data centers. Cloverleaf is planning a flagship data center project in Port Washington, a city about 25 miles north of Milwaukee.
Cloverleaf aims to build a data center campus that will draw up to 3.5 gigawatts of power from the grid when it reaches full capacity by the end of 2030, “which we think could be one of the biggest data center projects in the country,” Janous said. That’s equivalent to the power used by more than 2.5 million homes and a major increase in load for the region’s utility, We Energies, to try to serve.
Together with We Energies and its parent company, WEC Energy, Cloverleaf is working on a plan that, the companies hope, will avoid exposing utility customers to increased cost and climate risks.
“The utility has done a great job of building a very sustainable path,” Janous said. WEC Energy and Cloverleaf are in discussions to build enough solar, wind, and battery storage to meet more than half the site’s estimated energy needs. The campus may also be able to tap into zero-carbon electricity from the Point Beach nuclear power plant, which is now undergoing a federal relicensing process, he said.
The key mechanism of the deal is what Janous called a “ring-fenced, bespoke tariff.” That structure is meant to shield other utility customers from paying more than their fair share for infrastructure built to meet data centers’ demand.
“This tariff puts it completely in the hands of the buyer what energy mix they’re going to rely on,” he said. That allows Cloverleaf — and whatever customer or customers end up at the site it’s developing — to tap into the wind, solar, and battery storage capacity WEC Energy plans to build to meet its clean energy goals.
To be clear, this tariff structure is still being finalized and hasn’t yet been submitted to state utility regulators, said Dan Krueger, WEC Energy’s executive vice president of infrastructure and generation planning. But its fundamental structure is based on what he called a “simple, just not easy,” premise: “If you come here and you say you’ll pay your own way”— covering the cost of the energy and the transmission grid you’ll use — “we invest in power plants” to provide firm and reliable power.
“We make sure we can get power to the site, we make sure we have enough capacity to give you firm power, and then we start lining up the resources that can help make you green,” he said.
WEC Energy’s broader plans to serve its customers’ growing demand for power haven’t won the backing of environmental advocates. The Sierra Club is protesting the utility’s proposal to build or repower 3 GW of gas-fired power plants in the next several years, and has pressed Microsoft, which is planning its own $3.3 billion data center in We Energies territory, to engage in the state-regulated planning process to demand cleaner options.
Krueger said that the gas buildout is part of a larger $28 billion five-year capital plan that includes about $9.1 billion to add 4.3 GW of wind, solar, and battery capacity through 2029. That plan encompasses meeting new demand from a host of large customers including Microsoft, but it doesn’t include the resources being developed for Cloverleaf.
Janous said he agreed with the Sierra Club’s proposition that “the biggest customers should be using their influence to affect policy.” At the same time, Cloverleaf is building its data center for an eventual customer, and “our customers are looking for speed, scale, and sustainability,” in that order. Cementing a tariff with a host utility is a more direct path to achieving this objective, he said.
Similar developer partnerships between utilities and data centers are popping up nationwide.
In Georgia, the Clean Energy Buyers Association and utility Georgia Power are negotiating to give tech companies more freedom to contract for clean energy supplies. In North Carolina, Duke Energy is working with Amazon, Google, Microsoft, and steelmaker Nucor to create tariffs for long-duration energy storage, modular nuclear reactors, and other “clean firm” resources. In Nevada, utility NV Energy and Google have proposed a “clean transition tariff,” which would commit both companies to securing power from an advanced geothermal plant that Fervo Energy is planning.
“In the near term, to get things going quickly, we’re looking at solar and wind and storage solutions,” said Amanda Peterson Corio, Google’s global head of data center energy. “As we see new firming and clean technologies develop, we’ve planted a lot of seeds there,” like the clean transition tariff.
Insulating utility customers from bearing the costs of data center power demand is a core feature of these tariffs. Broader concerns over the costs that unchecked data center growth could impose have triggered pushback from communities, politicians, and regulators in data center hot spots. But Janous highlighted that Cloverleaf’s Wisconsin project will have “no impact on existing ratepayers — 100% of the cost associated with the site will flow through this tariff.”
That’s also good utility-ratemaking policy, said Chris Nagle, a principal in the energy practice at consultancy Charles River Associates, who worked on a recent report on the challenge of building what he described as “adaptable and scalable” tariffs that can apply to data centers across multiple utilities. “In the instances where one-off contracts or schedules are done, they should be replicable,” he said.
At the same time, Nagle continued, “each situation is different. Some operators may place more value on sourcing from carbon-free resources. Others may value cost-effectiveness more. Utilities may have sufficient excess generation capacity, or they may have none at all.”
Right now, top-tier tech companies appear willing to pay extra for clean power, said Alex Kania, managing director of equity research at Marathon Capital, an investment banking firm focused on clean infrastructure. He pointed to reports that Microsoft is promising to pay Constellation Energy roughly twice the going market price for long-term electricity supply for the zero-carbon power it expects to secure from restarting a unit of the former Three Mile Island nuclear plant.
Given that willingness to pay, “I think these hyperscalers could go further,” Kania said, using the common term for the tech giants like Amazon, Google, Meta, and Microsoft that have the largest data centers. With their scale, these companies can “go to regulators and say, ‘We’re going to find a way for utilities to grow and make these investments but also hold rates down for customers.’”
But cost is not the primary barrier to building clean power today.
In fact, portfolios of new solar, wind, and batteries are cheaper than new gas-fired power plants in most of the country. Instead, the core barrier to getting clean power online — be it for data centers or other large-scale power buyers, or even just for utilities — is the limited capacity of the power grid itself.
Across much of the U.S., hundreds of gigawatts of solar, wind, and battery projects are held up in years long waitlists to get interconnected to congested transmission grids. Facing this situation, some data center developers are targeting parts of the country where they can build their own clean power and avoid as much of the grid logjam as possible.
In November, for example, Google, infrastructure investor TPG Rise Climate, and clean power developer Intersect Power unveiled a plan to invest $20 billion by 2030 into clusters of wind, solar, and batteries that are largely dedicated to powering newly built data centers.
With the right balance of wind, solar, and batteries, topped off by power from the connecting grid or from on-site fossil-gas generators, Intersect Power CEO Sheldon Kimber says this approach can be “cleaner than any part of the grid. You’re talking 80% clean energy.”
And importantly, that clean energy is “all new and additional,” Google’s Peterson Corio said. That’s important for her employer, which wants to “make sure any new load we’re building, we’re building new generation to match it.”
Think tank Energy Innovation has cited this “energy park” concept as a neat solution to the twin problems of grid congestion and ballooning power demand. Combining generation and a big customer behind a single interconnection point can “speed up development, share costly onsite infrastructure, and directly connect complementary resources,” policy adviser Eric Gimon wrote in a December report.
And while many existing data center hubs aren’t well suited to energy parks, plenty of other places around the country are," said Gary Dorris, CEO and cofounder of energy analysis firm Ascend Analytics. Swaths of the Great Plains states, “roughly from Texas to the Dakotas,” offer “the combination of wind and solar, and then storage, to get to close to 100%” of a major power customer’s electricity needs, he said.
That’s not to say that building these energy parks will be simple. First, there’s the sheer amount of land required. A gigawatt-scale data center may occupy a “couple hundred acres,” Kimber said, but powering it will take about 5,000 acres of solar and another 10,000 for wind turbines.
And then there are the regulatory hurdles involved. Almost all U.S. utilities hold exclusive rights to provide power and build power-delivery infrastructure within the territories they serve. The exception is Texas, which has a uniquely competitive energy regulatory regime. Intersect Power plans to build its first energy park with Google and TPG Rise Climate in Texas, and the partners haven’t disclosed if they’re working on projects in any other states.
Cloverleaf’s Janous highlighted this and other constraints to the energy-park concept.
Getting the workforce to build large-scale projects in remote areas is another challenge, he added, as is accessing the fiber-optic data pipelines needed by data centers serving time- and bandwidth-sensitive tasks.
“We think the market for those sorts of deals is relatively small,” he said.
On the other hand, the task of training AI systems, which many hyperscalers are planning to dedicate billions of dollars to over the next few years, doesn’t require the same bandwidth or latency and can be “batched” to run at times when power is available.
“Historically a lot of data centers have landed close to each other to make communications faster, but it isn’t clear that the data centers being built today have those same constraints,” said Jeremy Fisher, principal adviser for climate and energy at the Sierra Club’s Environmental Law Program and co-author of Sierra Club’s recent report. “To the extent that the AI demand is real, those data centers should be closer to clean energy and contracting with new, local renewable energy and storage to ensure their load isn’t met with coal and gas.”
The Sierra Club and other climate advocates would prefer data center demand is met with no new fossil-fuel power at all. But few, if any, industry analysts think that is realistic. So, the question becomes how much gas will be necessary.
A growing number of companies are targeting data centers as potential new customers for gas-fired power, including oil and gas majors. ExxonMobil announced plans to enter the power-generation business in December, proposing to build a massive gas-fired power plant dedicated to powering data centers. A partnership between Chevron, investment firm Engine No. 1, and GE Vernova launched last month with a promise to build the country’s “first multi-gigawatt-scale co-located power plant and data center.”
President Donald Trump has also backed this idea of building fossil-fuel power plants for data centers. “I’m going to give emergency declarations so that they can start building them almost immediately,” he told attendees of the World Economic Forum in Davos, Switzerland, last month. “You don’t have to hook into the grid, which is old and, you know, could be taken out. … They can fuel it with anything they want. And they may have coal as a backup — good clean coal.”
The federal government doesn’t regulate utilities and power plants, however — states do. And even if that weren’t the case, Janous and Intersect Power’s Kimber agreed that building utility-scale gas power plants solely for data centers is a nonstarter. “We’ve been pitched so many projects on building behind-the-meter combined-cycle gas plants,” Janous said. “We think that’s absolutely the wrong approach.”
Kimber said that Intersect Power’s energy-parks concept does include gas-fueled generators. But they’ll be relatively cheap, allowing them to earn their keep even if run infrequently to fill the gaps at times when solar, wind, and batteries can’t supply power. Eventually they can be replaced with next-generation storage technologies.
That’s quite different from building a utility-scale power plant that must run most of the time for decades to pay back its cost, he said. “Our solution is more dynamic: It exhibits less lock-in, and it’s faster and more practical.”
Nor can large-scale gas power plants be built quickly enough to match the pace that developers have set for themselves to get data centers up and running. Multiple energy analysts have repeated that point over the past year, as have the companies that make and deploy the power plant technologies, like GE Vernova, which is reporting a three-year, $3 billion backlog for its gas turbines.
Utility holding company and major clean energy developer NextEra Energy announced last month that it was moving into building gas power plants with GE Vernova. But CEO John Ketchum noted in an earnings call that gas-fired generation “won’t be available at scale until 2030 and then, only in certain pockets of the U.S.,” and that costs of those power plants have “more than doubled over the last five years due to the limited supply of gas turbines.” Renewables and batteries, by contrast, “are ready now to meet that demand and will help lower power prices.”
Marathon Capital’s Kania agreed with this assessment. “Time-to-power is the true bottleneck,” he said. “But if you can figure out how to pull a rabbit out of a hat and get power resources up in the next few years, that’s going to be very valuable — because that’s very scarce.”
Originally published in Canary Media by Jeff St. John | February 26, 2025
This is the third article in our four-part series by Canary Media “Boon or bane: What will data centers do to the grid?”
Building dirty power plants to serve the AI boom could spell climate disaster. Luckily there are ways to meet surging demand that are cleaner, faster, and cheaper.
The world’s wealthiest tech companies want to build giant data centers across the United States to feed their AI ambitions, and they want to do it fast. Each data center can use as much electricity as a small city and cost more than $1 billion to construct.
If built, these data centers would unleash a torrent of demand for electricity on the country’s power grids. Utilities, regulators, and policymakers are scrambling to keep pace. If they mismanage their response, it could lead to higher utility bills for customers and far more carbon emissions. But this mad dash for power could also push the U.S. toward a cleaner and cheaper grid — if tech giants and other data center developers decide to treat the looming power crunch as a clean-power opportunity.
Utilities from Virginia to Texas are planning to build large numbers of new fossil-gas-fired power plants and to extend the life of coal plants. To justify this, they point to staggering — but dubious — forecasts of how much electricity data centers will gobble up in the coming years, mostly to power the AI efforts of the world’s largest tech companies.
Most of the tech giants in question have set ambitious clean energy goals. They’ve also built and procured more clean power than any other corporations in the country, and they’re active investors in or partners of startups working on next-generation carbon-free energy sources like advanced geothermal.
But some climate activists and energy analysts believe that given the current frenzy to build AI data centers, these firms have been too passive — too willing to accept the carbon-intensive plans that utilities have laid out on their behalf.
It’s time, these critics say, for everyone involved — tech giants, utilities, regulators, and policymakers — to “demand better.” That’s how the Sierra Club put it in a recent report urging action from Amazon, Google, Meta, Microsoft, and other tech firms driving data center growth across the country.
“I’m concerned the gold rush — to the extent there’s a true gold rush around AI — is trumping climate commitments,” said Laurie Williams, director of the Sierra Club’s Beyond Coal campaign and one of the report’s authors.
Williams isn’t alone. Climate activists, energy analysts, and policymakers in states with fast-growing data center markets fear that data center developers are prioritizing expediency over solving cost and climate challenges.
“I think what we’re seeing is a culture clash,” she said. “You have the tech industry, which is used to moving fast and making deals, and a highly regulated utility space.”
Some tech firms intend to rely on unproven technologies like small modular nuclear reactors to build emissions-free data centers, an approach that analysts say is needlessly unreliable. Others want to divert electricity from existing nuclear plants — as Amazon hopes to do in Pennsylvania — which simply shifts clean power from utility grids to tech companies. Yet others are simply embracing new gas construction as the best path forward for now, albeit with promises to use cleaner energy down the road, as Meta is doing in Louisiana.
Meanwhile, several fossil fuel companies are hoping to convince tech firms and data center developers to largely avoid the power grid by building fossil-gas-fired plants that solely serve data centers — an idea that’s both antithetical to climate goals and, according to industry analysts, impractical.
But a number of tech firms and independent data center developers are pursuing more realistic strategies that are both affordable and clean in order to meet their climate goals.
These projects should be the model, clean power advocates say, if we want to ensure the predicted AI-fueled boom in energy demand doesn’t hurt utility customers or climate goals.
And ideally, the companies involved would go even further, Williams said, by engaging in utility proceedings to demand a clean energy transition, by bringing their own grid-friendly “demand management” and clean power and batteries to the table, and by looking beyond the country’s crowded data center hubs to places with space to build more solar and wind farms.
The basic mandate of utilities is to provide reliable and affordable energy to all customers. Many utilities also have mandates — issued by either their own executives or state policymakers — to build clean energy and cut carbon emissions.
But the scale and urgency of the data center boom has put these priorities on a collision course.
As the primary drivers of that conflict, data centers have a responsibility to help out. That’s Brian Janous’ philosophy. He’s the cofounder of Cloverleaf Infrastructure, a developer of sites for large power users, including data centers. Cloverleaf is planning a flagship data center project in Port Washington, a city about 25 miles north of Milwaukee.
Cloverleaf aims to build a data center campus that will draw up to 3.5 gigawatts of power from the grid when it reaches full capacity by the end of 2030, “which we think could be one of the biggest data center projects in the country,” Janous said. That’s equivalent to the power used by more than 2.5 million homes and a major increase in load for the region’s utility, We Energies, to try to serve.
Together with We Energies and its parent company, WEC Energy, Cloverleaf is working on a plan that, the companies hope, will avoid exposing utility customers to increased cost and climate risks.
“The utility has done a great job of building a very sustainable path,” Janous said. WEC Energy and Cloverleaf are in discussions to build enough solar, wind, and battery storage to meet more than half the site’s estimated energy needs. The campus may also be able to tap into zero-carbon electricity from the Point Beach nuclear power plant, which is now undergoing a federal relicensing process, he said.
The key mechanism of the deal is what Janous called a “ring-fenced, bespoke tariff.” That structure is meant to shield other utility customers from paying more than their fair share for infrastructure built to meet data centers’ demand.
“This tariff puts it completely in the hands of the buyer what energy mix they’re going to rely on,” he said. That allows Cloverleaf — and whatever customer or customers end up at the site it’s developing — to tap into the wind, solar, and battery storage capacity WEC Energy plans to build to meet its clean energy goals.
To be clear, this tariff structure is still being finalized and hasn’t yet been submitted to state utility regulators, said Dan Krueger, WEC Energy’s executive vice president of infrastructure and generation planning. But its fundamental structure is based on what he called a “simple, just not easy,” premise: “If you come here and you say you’ll pay your own way”— covering the cost of the energy and the transmission grid you’ll use — “we invest in power plants” to provide firm and reliable power.
“We make sure we can get power to the site, we make sure we have enough capacity to give you firm power, and then we start lining up the resources that can help make you green,” he said.
WEC Energy’s broader plans to serve its customers’ growing demand for power haven’t won the backing of environmental advocates. The Sierra Club is protesting the utility’s proposal to build or repower 3 GW of gas-fired power plants in the next several years, and has pressed Microsoft, which is planning its own $3.3 billion data center in We Energies territory, to engage in the state-regulated planning process to demand cleaner options.
Krueger said that the gas buildout is part of a larger $28 billion five-year capital plan that includes about $9.1 billion to add 4.3 GW of wind, solar, and battery capacity through 2029. That plan encompasses meeting new demand from a host of large customers including Microsoft, but it doesn’t include the resources being developed for Cloverleaf.
Janous said he agreed with the Sierra Club’s proposition that “the biggest customers should be using their influence to affect policy.” At the same time, Cloverleaf is building its data center for an eventual customer, and “our customers are looking for speed, scale, and sustainability,” in that order. Cementing a tariff with a host utility is a more direct path to achieving this objective, he said.
Similar developer partnerships between utilities and data centers are popping up nationwide.
In Georgia, the Clean Energy Buyers Association and utility Georgia Power are negotiating to give tech companies more freedom to contract for clean energy supplies. In North Carolina, Duke Energy is working with Amazon, Google, Microsoft, and steelmaker Nucor to create tariffs for long-duration energy storage, modular nuclear reactors, and other “clean firm” resources. In Nevada, utility NV Energy and Google have proposed a “clean transition tariff,” which would commit both companies to securing power from an advanced geothermal plant that Fervo Energy is planning.
“In the near term, to get things going quickly, we’re looking at solar and wind and storage solutions,” said Amanda Peterson Corio, Google’s global head of data center energy. “As we see new firming and clean technologies develop, we’ve planted a lot of seeds there,” like the clean transition tariff.
Insulating utility customers from bearing the costs of data center power demand is a core feature of these tariffs. Broader concerns over the costs that unchecked data center growth could impose have triggered pushback from communities, politicians, and regulators in data center hot spots. But Janous highlighted that Cloverleaf’s Wisconsin project will have “no impact on existing ratepayers — 100% of the cost associated with the site will flow through this tariff.”
That’s also good utility-ratemaking policy, said Chris Nagle, a principal in the energy practice at consultancy Charles River Associates, who worked on a recent report on the challenge of building what he described as “adaptable and scalable” tariffs that can apply to data centers across multiple utilities. “In the instances where one-off contracts or schedules are done, they should be replicable,” he said.
At the same time, Nagle continued, “each situation is different. Some operators may place more value on sourcing from carbon-free resources. Others may value cost-effectiveness more. Utilities may have sufficient excess generation capacity, or they may have none at all.”
Right now, top-tier tech companies appear willing to pay extra for clean power, said Alex Kania, managing director of equity research at Marathon Capital, an investment banking firm focused on clean infrastructure. He pointed to reports that Microsoft is promising to pay Constellation Energy roughly twice the going market price for long-term electricity supply for the zero-carbon power it expects to secure from restarting a unit of the former Three Mile Island nuclear plant.
Given that willingness to pay, “I think these hyperscalers could go further,” Kania said, using the common term for the tech giants like Amazon, Google, Meta, and Microsoft that have the largest data centers. With their scale, these companies can “go to regulators and say, ‘We’re going to find a way for utilities to grow and make these investments but also hold rates down for customers.’”
But cost is not the primary barrier to building clean power today.
In fact, portfolios of new solar, wind, and batteries are cheaper than new gas-fired power plants in most of the country. Instead, the core barrier to getting clean power online — be it for data centers or other large-scale power buyers, or even just for utilities — is the limited capacity of the power grid itself.
Across much of the U.S., hundreds of gigawatts of solar, wind, and battery projects are held up in years long waitlists to get interconnected to congested transmission grids. Facing this situation, some data center developers are targeting parts of the country where they can build their own clean power and avoid as much of the grid logjam as possible.
In November, for example, Google, infrastructure investor TPG Rise Climate, and clean power developer Intersect Power unveiled a plan to invest $20 billion by 2030 into clusters of wind, solar, and batteries that are largely dedicated to powering newly built data centers.
With the right balance of wind, solar, and batteries, topped off by power from the connecting grid or from on-site fossil-gas generators, Intersect Power CEO Sheldon Kimber says this approach can be “cleaner than any part of the grid. You’re talking 80% clean energy.”
And importantly, that clean energy is “all new and additional,” Google’s Peterson Corio said. That’s important for her employer, which wants to “make sure any new load we’re building, we’re building new generation to match it.”
Think tank Energy Innovation has cited this “energy park” concept as a neat solution to the twin problems of grid congestion and ballooning power demand. Combining generation and a big customer behind a single interconnection point can “speed up development, share costly onsite infrastructure, and directly connect complementary resources,” policy adviser Eric Gimon wrote in a December report.
And while many existing data center hubs aren’t well suited to energy parks, plenty of other places around the country are," said Gary Dorris, CEO and cofounder of energy analysis firm Ascend Analytics. Swaths of the Great Plains states, “roughly from Texas to the Dakotas,” offer “the combination of wind and solar, and then storage, to get to close to 100%” of a major power customer’s electricity needs, he said.
That’s not to say that building these energy parks will be simple. First, there’s the sheer amount of land required. A gigawatt-scale data center may occupy a “couple hundred acres,” Kimber said, but powering it will take about 5,000 acres of solar and another 10,000 for wind turbines.
And then there are the regulatory hurdles involved. Almost all U.S. utilities hold exclusive rights to provide power and build power-delivery infrastructure within the territories they serve. The exception is Texas, which has a uniquely competitive energy regulatory regime. Intersect Power plans to build its first energy park with Google and TPG Rise Climate in Texas, and the partners haven’t disclosed if they’re working on projects in any other states.
Cloverleaf’s Janous highlighted this and other constraints to the energy-park concept.
Getting the workforce to build large-scale projects in remote areas is another challenge, he added, as is accessing the fiber-optic data pipelines needed by data centers serving time- and bandwidth-sensitive tasks.
“We think the market for those sorts of deals is relatively small,” he said.
On the other hand, the task of training AI systems, which many hyperscalers are planning to dedicate billions of dollars to over the next few years, doesn’t require the same bandwidth or latency and can be “batched” to run at times when power is available.
“Historically a lot of data centers have landed close to each other to make communications faster, but it isn’t clear that the data centers being built today have those same constraints,” said Jeremy Fisher, principal adviser for climate and energy at the Sierra Club’s Environmental Law Program and co-author of Sierra Club’s recent report. “To the extent that the AI demand is real, those data centers should be closer to clean energy and contracting with new, local renewable energy and storage to ensure their load isn’t met with coal and gas.”
The Sierra Club and other climate advocates would prefer data center demand is met with no new fossil-fuel power at all. But few, if any, industry analysts think that is realistic. So, the question becomes how much gas will be necessary.
A growing number of companies are targeting data centers as potential new customers for gas-fired power, including oil and gas majors. ExxonMobil announced plans to enter the power-generation business in December, proposing to build a massive gas-fired power plant dedicated to powering data centers. A partnership between Chevron, investment firm Engine No. 1, and GE Vernova launched last month with a promise to build the country’s “first multi-gigawatt-scale co-located power plant and data center.”
President Donald Trump has also backed this idea of building fossil-fuel power plants for data centers. “I’m going to give emergency declarations so that they can start building them almost immediately,” he told attendees of the World Economic Forum in Davos, Switzerland, last month. “You don’t have to hook into the grid, which is old and, you know, could be taken out. … They can fuel it with anything they want. And they may have coal as a backup — good clean coal.”
The federal government doesn’t regulate utilities and power plants, however — states do. And even if that weren’t the case, Janous and Intersect Power’s Kimber agreed that building utility-scale gas power plants solely for data centers is a nonstarter. “We’ve been pitched so many projects on building behind-the-meter combined-cycle gas plants,” Janous said. “We think that’s absolutely the wrong approach.”
Kimber said that Intersect Power’s energy-parks concept does include gas-fueled generators. But they’ll be relatively cheap, allowing them to earn their keep even if run infrequently to fill the gaps at times when solar, wind, and batteries can’t supply power. Eventually they can be replaced with next-generation storage technologies.
That’s quite different from building a utility-scale power plant that must run most of the time for decades to pay back its cost, he said. “Our solution is more dynamic: It exhibits less lock-in, and it’s faster and more practical.”
Nor can large-scale gas power plants be built quickly enough to match the pace that developers have set for themselves to get data centers up and running. Multiple energy analysts have repeated that point over the past year, as have the companies that make and deploy the power plant technologies, like GE Vernova, which is reporting a three-year, $3 billion backlog for its gas turbines.
Utility holding company and major clean energy developer NextEra Energy announced last month that it was moving into building gas power plants with GE Vernova. But CEO John Ketchum noted in an earnings call that gas-fired generation “won’t be available at scale until 2030 and then, only in certain pockets of the U.S.,” and that costs of those power plants have “more than doubled over the last five years due to the limited supply of gas turbines.” Renewables and batteries, by contrast, “are ready now to meet that demand and will help lower power prices.”
Marathon Capital’s Kania agreed with this assessment. “Time-to-power is the true bottleneck,” he said. “But if you can figure out how to pull a rabbit out of a hat and get power resources up in the next few years, that’s going to be very valuable — because that’s very scarce.”
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