I’m sure you’ve seen many announcements in the past 24 months or so about impressive plans/investments by tech companies in alternative energy to power the explosive growth in AI data centers. On the surface, that sounds great – but there are substantial risks. Several of those plans are based on energy technology unproven at commercial scale (or even beyond a lab setting), and it will take years before the first electrons are generated. For instance, Trellis reported yesterday that
“Amazon is looking to deploy up to 5 gigawatts of X-energy’s technology by 2039, starting with a four-unit, 320-megawatt project in central Washington that is being developed by Energy Northwest.”
That is 14 years from now – assuming no unforeseen delays.
In the meantime, it’s clear that natural gas will be a major energy source in the near- to mid-term. Here are three meaningful indicators:
- From Inside Climate News: “Alabama state regulators have cleared the way for Alabama Power to purchase an 895-megawatt gas-fired power plant… Alabama Power, in documents submitted to the commission, said that the addition was needed for 2029, based on its latest load forecast, which includes two large data center projects.”
- From The Hill: “U.S. electricity usage is expected to grow to new highs in 2025 and 2026, according to a Tuesday projection. The forecast, from the Energy Information Administration (EIA), the nation’s energy statistics agency, attributes the projected increases to power hungry data centers in the latest iteration of its Short Term Energy Outlook. It states power sales to the commercial sector will increase by 3 percent this year and 4.5 percent next year ‘largely by more demand from data centers.’”
- From Financial Times: “Siemens Energy said it had amassed a record order backlog of almost €136bn thanks to ‘enormous’ demand for electricity driven by new data centres being built in the US… ‘Enormous demand for electricity for data centres in particular are now driving very high demand for our products in the US,’ chief executive Christian Bruch told reporters. He added that 60 per cent of its 14 gigawatts of gas turbine orders in the year to date were for data centres.”
Companies looking to both increase their use of AI for business and decrease their Scope 2 emissions may find that a difficult balance for a few years.
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