Fast moving energy landscape is demanding power for Data Centers, and for now, pushing up greenhouse emissions as developers have been choosing gas as the speediest path to powering up.
But some savvy operators, as well as policy makers, looking out a decade or two, wonder about the wisdom of relying on fossil fuel, with the prices for clean energy, particularly solar and batteries, crashing month by month, and the urgency of climate change only rising.
Google parent Alphabet on Monday announced it will acquire Intersect, a data center and energy infrastructure company, for $4.75 billion in cash in addition to the assumption of debt.
In a release at the time, Intersect said its strategic partnership with Google and TPG Rise Climate aimed to develop gigawatts of data center capacity across the U.S., including a $20 billion investment in renewable power infrastructure by the end of the decade.
Sheldon Kimber, Founder and CEO of Intersect, on Energy Empire Podcast:
…if I were starting my own company, I see clean firm and next-gen geothermal where it becomes really hard to imagine putting large amounts of that in the load pocket, and those technologies are going to have to compete head-to-head with renewables for transmission. I wouldn’t bet against solar and batteries. I just wouldn’t. ….I don’t know anybody on the planet who’d argue that’s a great strategy.
It’s all about the flexibility to get rid of the gas over time. We are not building anything that isn’t in a place where there are enough renewables around it, which we control, that we can decarbonize it as batteries get better. We’re building flexible gas that’s modular, can be taken out, can run at a lower capacity factor, with enough renewables on the site that we can keep building until it’s 100% clean firm. The problem is people siting a big combined-cycle gas plant behind the meter in a tight, landlocked area that can never be decarbonized. That’s a recipe for stranded costs.
Lawmakers in states with stronger climate policies don’t want data centers to hinder their goal of slashing planet-warming greenhouse gas emissions.
In other states, environmental advocates and corporations with clean energy goals are working regulatory levers to push monopoly utilities that historically control the energy supply and grid access.
The problem clean energy proponents are confronting is that tech giants are demanding power at such speed and scale — some data centers consume more energy than a mid-size city — that the construction of wind and solar simply can’t keep up.
As a result, the AI boom has set in motion the biggest-ever construction boom of natural gas-fired power plants, not to mention moves by utilities, power plant owners and the federal government to keep aging coal-fired power plants operating past their previously scheduled retirement dates.
Legislation on the desk of New York Gov. Kathy Hochul would require data centers over a certain size to meet renewable energy benchmarks starting in 2030 and, by 2040, get at least 90% of their energy from renewable energies. The bill’s author, state Sen. Kristen Gonzalez, a Democrat, said the targets are realistic.
“We are literally talking about the wealthiest companies in the world that are looking to build in New York state, and if they have the resources to put billions of dollars into data center development, then they certainly should have the resources to build out renewable energy sources to power them,” Gonzalez told The Associated Press.
Michigan, Oregon and Minnesota led the way, enacting laws in the last 18 months designed to protect their pre-existing requirements that electric utilities use only emissions-free energy sources by 2040.
Minnesota and Oregon ordered regulators to ensure that the energy that supplies data centers is in line with their emissions-reduction goals, while Michigan required hyperscale data centers to meet a clean energy requirement — 90% within six years — to access its lucrative sales tax exemption.
———–
Above:
Michigan’s Public Service Commission has applied a set of requirements on Oracle, currently developing a Hyperscale Data Center south of Ann Arbor, Michigan, including a mandate that the facility will scale back its power demands in a grid crunch in favor of residential customers.
The agreement also requires Oracle to purchase, on its own dime, 1400 MW of Battery Storage, to be operated by the Utility DTE, on behalf of of Michigan ratepayers.
Google has agreed to buy the output of a massive solar power project to offset its fossil fuel emissions, in a show of continued demand for renewable energy despite US President Donald Trump’s efforts to kill it. The search company will take 100 per cent of the initial output of the Steel River Energy Center in Arkansas when it becomes operational in 2029.
The project is the biggest of its kind to break ground in the US and will initially deliver 1.6 gigawatts of solar power and 2 gigawatt hours of battery storage, enough to power more than 315,000 homes each year. Upon completion it will reach 2.5GW of solar and 2.9GWh of storage. The deal is a virtual power purchase agreement, in which Google will pay for the project’s electricity at a fixed price without receiving the energy.
Financial terms of the agreement were not disclosed. Since data centres require continuous power, they often cannot run directly on renewables, which require the sun to be shining or the wind to be blowing to generate electricity. Instead, most data centres are hooked up to the electricity grid — which uses a mixture of natural gas, renewables, coal and nuclear, and on-site power, often gas turbines and engines — for uninterrupted power.
So Google relies on the traditional grid for power while allocating the solar output to customers with more variable demand. The long-term revenue commitment gives renewable project developers the financial guarantee they need to secure financing and build new projects. “The investment supplies the grid at large, and passes along the benefits from the local power plant to all customers in Arkansas,” said Will Conkling, Google’s head of data centre energy.
The practice of buying renewable energy to match fossil fuel use is controversial, with critics pointing out that companies still draw power from the grid while the clean energy they pay for may be generated elsewhere or at another time. According to the Environmental and Energy Study Institute, about 56 per cent of the electricity used to power US data centres comes from fossil fuels.
Google’s grid-based emissions from electricity use rose 37 per cent in 2025, while it, Meta, Amazon and Microsoft accounted for 49 per cent of all corporate clean-power deals in the same year, according to BloombergNEF. As tech giants’ power use is rapidly growing, some have admitted that sustaining their clean energy commitments is a struggle.
In its 2026 environmental report, Google said it was getting harder to reach its “moonshot” climate goals. Developer Cypress Creek Energy says the deal is a rare bright spot for US solar, an industry targeted by the Trump administration, which has withdrawn its tax credits and attempted to delay or block projects.
Rising power demand is boosting projects such as Steel River. Google said its electricity use leapt by a record 37 per cent in 2025, while Microsoft’s grew 24 per cent. Total US electricity demand is set to grow between 25 and 50 per cent by 2050, according to the Energy Information Administration.
Tech groups such as Google were increasingly looking for behemoth projects such as Steel River to match their growing energy use, said Cypress Creek Energy chief executive Kevin Smith.