The rapid expansion of artificial intelligence is driving a significant increase in energy demand, leading to a resurgence in the construction of natural gas-fired power plants. This trend has prompted renewable energy advocates and some corporations to push for cleaner alternatives to power the massive data centers that underpin AI.
Tech giants are demanding power at a scale that often exceeds the capacity of existing renewable energy infrastructure. Some data centers consume as much energy as a mid-size city, a demand that the current pace of wind and solar development struggles to match. This energy gap has resulted in the largest construction boom for natural gas plants and prompted efforts to extend the operational life of aging coal-fired power plants.
In states with strong climate policies, lawmakers are concerned that the energy needs of data centers could undermine goals to reduce greenhouse gas emissions. For instance, a bill in New York, awaiting the governor's signature, would require data centers above a certain size to meet renewable energy benchmarks starting in 2030, with a goal of sourcing 90% of their energy from renewables by 2040. State Sen. Kristen Gonzalez, the bill's author, stated that these targets are achievable for wealthy companies investing in data center development.
Other states have already implemented similar measures. Michigan, Oregon, and Minnesota have enacted laws within the past 18 months to ensure that electric utilities continue to use only emissions-free energy sources by 2040. Oregon and Minnesota regulators have been directed to align data center energy supply with emissions reduction goals. Michigan's law requires hyperscale data centers to meet a 90% clean energy requirement within six years to qualify for a sales tax exemption.
Legislation addressing data center energy use has also emerged in California, Illinois, New Jersey, Pennsylvania, and Virginia. California Sen. John Padilla, who sponsored a bill in his state, emphasized that the scale of demand from data centers necessitates a departure from conventional energy practices.
While the demand for natural gas rises, major technology companies are also investing billions in their own zero-emission energy projects, including solar, wind, geothermal, nuclear, and battery storage. These companies, alongside environmental groups and business associations, are seeking greater grid access to incorporate these clean energy sources, particularly in regions where utilities have historically been resistant to renewable energy mandates.
Greg Robinson, whose firm Aston Power helps procure energy for large consumers, compared the situation to the rise of express mail services when the postal service could not keep up with business demands. He noted that utilities, which profit from building power plants and transmission infrastructure, can benefit from facilitating clean energy connections for data centers. These connections provide utilities with a power source that does not incur direct costs and a large, long-term customer that supports grid expansion.
In Colorado, clean energy advocates successfully urged regulators to compel Xcel Energy to establish a program allowing large power users to connect clean energy projects to the grid. Xcel Energy indicated its agreement with the potential benefits of such a program, citing examples of Google's approved projects in Nevada and Minnesota that utilized similar frameworks.
Google has reported that similar project concepts are approved or under consideration in eight other states, including Indiana, Kansas, Missouri, and South Carolina. The Corporate Energy Buyers Association has also reached an agreement with Georgia Power, approved by state regulators, which allows its members to build and connect clean energy sources to the grid, with similar initiatives being pursued in North Carolina.