Navigating the Big-Tech Clean Energy Crunch: Challenges and Solutions

Morgan Meaker

Big Tech’s appetite for energy is just about visible from the east coast of Scotland. Some 12 miles out to sea sits a wind farm, where each of the 60 giant turbines has blades roughly the length of an American football field. The utility companies behind the Moray West project had promised the site would be capable of generating enough electricity to power 1.3 million homes once completed. That was before Amazon stepped in.

In January, Amazon announced it had struck a deal to claim more than half the site’s 880 megawatts of output, part of its ongoing attempt to slake its unquenchable thirst for power. As the world’s biggest companies race to build the infrastructure necessary to enable artificial intelligence, even remote Scottish wind farms are becoming indispensable.

In Europe last year, $79.4 million was spent on new data center projects, according to research firm Global Data. Already in 2024, there are signs that demand is accelerating. Today Microsoft announced a $3.2 billion bet on Sweden data centers. Earlier this year, the company also said it would double its data center footprint in Germany, while also pledging a $4.3 billion data center investment for AI infrastructure in France. Amazon announced a network of data centers in the state of Brandenburg as part of a $8.5 billion investment in Germany, later dedicating another $17.1 billion to Spain. Google said it would spend $1.1 billion on its data center in Finland to drive AI growth.

As the expansion of data centers accelerates, the issue of their energy requirements has become critical. Microsoft, Meta, and Google have set ambitions to achieve net zero emissions by 2030. Meanwhile, Amazon aims for 2040. These companies have significantly invested in renewable energy sources over the past decade, though the reliance on electrical grids, which are currently under stress due to the rising demand for green energy, presents a challenge. This scenario is pushing these corporations to contemplate future energy solutions that may involve setting up their independent power systems.

As energy demands rise, alternatives must be explored, according to Colm Shorten, a senior director at JLL. The tech industry, especially data centers, is exploring direct access to power sources, potentially bypassing traditional energy grids with solutions like gas generators or innovative technologies such as green hydrogen.

There are two major reasons why data centers consume significant power: one is to run the chips that support various computational tasks, and the other is to cool these systems to prevent overheating. Efforts to switch from air cooling to liquid cooling of chips are expected to provide some energy savings. However, projections by the International Energy Association suggest that the power consumption of data centers might double by 2026. The push for artificial intelligence and other compute-intensive technologies further drives this demand.

In recent years, tech firms have aggressively pursued renewable energy through power purchase agreements (PPAs), securing energy from sources like wind and solar even before such projects are operational. This approach, first adopted by companies like Meta and Google, has contributed to the flourishing of Europe’s PPA market. Recently, Microsoft signed a landmark $10 billion renewable energy agreement, marking the largest such deal worldwide, covering multiple locations in Europe and the US.

Yet renewables still need to run through the electricity grid, which is becoming a bottleneck—especially in Europe, as a surge of renewable producers try to connect to feed green transition demand across a multitude of sectors. “We’re going to run into energy constraints,” Meta CEO Mark Zuckerberg predicted on a podcast in April. At Davos this year, OpenAI CEO Sam Altman also warned that the status quo was not going to be able to provide AI with the power it needed to advance. “There’s no way to get there without a breakthrough,” he said at a Bloomberg event.

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Grid operators are essentially saying the same thing. Ireland’s state-owned electricity provider Eirgrid cited grid problems when it imposed an effective moratorium on Dublin data centers two years ago. When the municipality of Amsterdam introduced a similar pause, the Dutch Data Center Association, an industry group, hit back. “The current grid congestion in North Holland is blocking the growth of the data center sector,” it said in a statement.

In the search for space on the grid, data centers are being pushed into parts of Europe where their arrival is more conspicuous, risking backlash from the smaller communities when they show up. That trend is already visible in Germany, according to Simon Hinterholzer, researcher at Germany’s Borderstep Institute for Innovation and Sustainability. “In the past, the large majority of new data centers were being built in Frankfurt,” he says. “This has completely changed in the last two or three years.” He points to a 300-megawatt data center being built in the small town of Wustermark, as well as Amazon’s latest investment into Brandenburg, the region bordering Berlin where more than 70 turbines were installed last year.

To cope long-term, there are more calls for data centers to find ways to survive off-grid. “The size of AI projects are getting bigger and bigger, reaching up to 1 gigawatt of power, which cannot be supplied by the traditional power grids,” says Ricardo Abad, founder of data center Quark, which is working on a new site with an unnamed partner in Spain that will be able to generate its own power through on-site solar and wind power. These types of on-site projects are technically still connected to the grid—in case they want to offload excess power—but they have the ability to operate independently, he says.

The same year Dublin imposed limits on data centers, Amazon launched its most substantial solar power project at its logistics hub in Seville, Spain, covering both the rooftop and parking area. Simultaneously, a top Google executive responsible for selecting European data center locations mentioned an interest in integrating renewable energy within its future data facilities. Neither Microsoft nor Meta have embarked on creating fully off-grid sites. However, Microsoft has begun construction of a Dublin data center that includes its own gas power backup, ensuring operation continuity independent of external power suppliers.

Despite their current reliance on traditional power grids, major technology firms are actively exploring clean energy solutions, though these efforts remain in preliminary phases. Kilian Wagner of the German digital association Bitkom highlighted the future importance of innovative energy technologies like next-generation nuclear reactors, renewables, and storage systems. OpenAI’s Altman has notably invested in Helion Energy, a pioneer in nuclear fusion technology, which has entered into an agreement to supply Microsoft with significant power once its first fusion plant is operational. Additionally, Microsoft in the US has experimented with hydrogen fuel cells, promoting them as a zero-emission power source for data centers.

The implications of data centers moving off-grid are yet to be fully understood. By pursuing independence from traditional energy sources, tech giants may pave the way towards discovering sustainable energy solutions for the future. Until such breakthroughs are achieved, they remain dependent on existing power infrastructures.

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