Gravel2Gavel Construction & Real Estate Law Blog
Artificial intelligence, data centers, carbon removal and zero-emission power may sound like a winning line (plus the Free Space) on a 2024 Buzzword Bingo card. But the concepts have come into dramatic real-world tension as private and public actors seek to accommodate the digital and environmental imperatives for green energy.
After years of fairly stable demand, punctuated by declines during the pandemic and economic slumps, electricity demand is projected to double by 2050. A principal cause is the rapid expansion in the power needed to energize and cool servers amid explosive growth in the number and size of data centers, crypto miners, and other point sources of computation. Data centers were 3% of U.S. demand and are projected to be up to 9% or more by 2030; AI will drive a 160% surge in data center demand by 2030. A commentator notes, “We haven’t seen [growth like] this in a generation.”
The large technology companies have vowed to power their enterprises with zero-emission electricity—from renewable sources like solar, wind and geothermal; advanced storage technologies; and nuclear fission and fusion. To achieve their goals, they are contracting with incremental sources of alternative energy that might otherwise have supplanted coal- and gas-fired power for industrial, commercial, residential and public works. A March 2024 report by S&P Global found that the tech sector led the market for clean energy purchases, making up over two-thirds of deals completed since February 2023.
Tech companies are exploring the option of partnering directly with advanced energy developers to build energy facilities that would directly supply the data centers—for example, Microsoft is exploring small modular nuclear reactors, while Meta recently announced a partnership with Sage Geosystems, an advanced geothermal developer, to expand the use of geothermal energy production for data centers. The growth in data center energy demand may be outpacing renewable energy production. Some utilities have responded with plans for new natural gas-fired power plants, sparking concerns that data center demand growth may impact U.S. climate goals despite tech’s focus on net zero.
Data centers may create competition for limited clean energy resources with other cleantech. After all, renewable energy is not the only response to climate change; a number of projects capture ambient carbon from the atmosphere, both natural (reforestation, afforestation, sequestration of biological carbon sources in the soil and oceans) and manmade. Direct air capture (DAC) projects entail large machinery to absorb carbon in the atmosphere—machinery that itself is energy intensive.
These simmering factors came to a boil with the announcement last week by CarbonCapture Inc. that it would suspend its development of a DAC plant in Wyoming and assess relocation of the project, Project Bison, to another state. Project Bison is on hiatus not because of regulatory obstacles (its Class VI permits have been secured) or funding (it would have been part of a DAC Hub selected for $12.5 million in DOE funds). Rather, the company cited the inability to contract for enough zero-emission power given the highly competitive market in Wyoming. Given the Cowboy State’s ambitions to become carbon negative, large technology companies are targeting Wyoming for data centers and similar facilities and have assertively staked positions with green energy sources. Ironically, a technology company is an investor in CarbonCapture Inc. itself.
The tensions between AI and data centers, and the green power sources needed not only for those purposes but for responses to climate change and the economy more generally, are not going away. Policymakers, entrepreneurs and advisers (including Pillsbury’s own data centers team) must focus on efficient use, rapid prudent deployment, and prioritization of energy generation and transmission across the country and globe.
RELATED ARTICLES