Green no more: Extreme needs turn Big Tech away from renewables

It wasn’t supposed to be this way. A decade on from the Paris Agreement on climate, huge new global sources of demand for power were supposed to be met by renewables, not fossil fuels.

New demand spikes don’t come much bigger than the boom predicted in relation to data centres as they gear up to cope with the global power needs of AI, which the International Energy Agency (IEA) reckons will double to 945TWh by 2030.

The scale and speed of growth dictated by AI is posing challenges for the so-called ‘hyperscalers’ – the likes of Meta, Microsoft and Google in the data centre sector that are planning the biggest facilities.

For the last decade those household names have deservedly won plaudits by leading the charge towards corporate procurement of renewable energy, striking deals around the world that have underpinned additions of wind and solar to grids.

Those renewables-focused deals continue to happen, it is important to stress. The wider story has changed over the last 12 months, however, and especially in the US since the return of Donald Trump to the White House with his dual policy of American “dominance” in energy of the fossil variety and AI alike.

Within days of Trump’s inauguration in January, for example, oil supermajor Chevron and power technology giant GE Vernova announced an alliance to co-locate 4GW of gas capacity with data centres. Crusoe, a specialist in developing AI data centres, has said it will tap into that partnership and is itself building a major new gas-powered facility for ChatGPT creator OpenAI, whose CEO Sam Altman has been prominent in the US's 'Stargate' AI infrastructure drive enthusiastically backed by Trump.

Elsewhere Meta is embroiled in controversy over plans by a Louisiana utility for a major new gas-fired power plant, apparently to serve a big new data centre for the Facebook owner.

As recently as last week, Finland-based Wartsila issued a media release hailing a 282MW deal for gas engines that will directly supply an unidentified data centre in Ohio. Wartsila’s statement claimed that data centres face “significant power challenges due to the limitations and inefficiencies of traditional supply grids”.

The newest, 'cleanest' combined-cycle gas turbines have experienced such a resurgence of interest in what was ten years ago seen as a 'sunset' energy source that buyers now face waits of up to seven years, according to some industry estimates. That has even led to claims by some in the US industry that renewables are needed as a “bridge” power source until new gas can be brought online, turning on its head the previous wisdom over their respective roles.

The need for 'many nines reliability'

The role of gas as a favoured enabler of AI growth has several drivers, said Ben Hertz-Shargel, head of grid edge for Wood Mackenzie.

Operators in key data centre regions such as Virginia and Texas are involved in a land grab to avoid missing out on lucrative potential revenues from AI that are expected to start flowing over the next few years. That means securing access to power as well as development sites for their facilities.

Hertz-Shargel agrees that the tech giants “absolutely do want – and they have proven their desire – to procure clean energy when possible. The problem is data centres have extremely high reliability needs” – or “many nines” as it is expressed in the IT industry, which sees 99.999% availability as a key target.

“So, if you want to site a data centre, you need high confidence in the physical power delivery. That either means plugging into a grid or having some sort of baseload generation, some dispatchable generation behind the meter.”

There has been plenty of talk about off-grid solutions, but Hertz-Shargel says there is limited evidence so far of them gaining widespread traction.

At present data centre companies “remain much more comfortable plugging into a grid” – and when utilities or others consider how to meet that new demand “there is widespread belief that you need dispatchable power… and that usually means natural gas.”

Ironically, said Hertz-Shargel, large amounts of renewables and storage that together could provide high-reliability power have been stalled from coming through by the US’ “broken interconnection process”.

“The cost and slow pace of developing transmission in the US is also a really key underlying challenge. If there was far more regional and interregional transmission, you'd be able to import renewables from further places, which makes onboarding them much easier.”

In recent weeks, the fallout from passage of Donald Trump's "Big Beautiful Bill" has raised new questions over the scale of renewables buildout in the US, with Wood Mackenzie warning that the potential for the bill to limit power system growth poses a threat to American ambitions for AI dominance.

Derailing the energy transition?

Plugging data centres into gas, either directly or via a grid, is often presented as a short-term 'needs must' strategy, and tech giants are keen to talk up plans for mitigation measures such as carbon capture.

“I think it’s absolutely right to be concerned that this is derailing the energy transition, at least in the US,” said Kunkel, who believes the level of forecast power growth spurred by AI, plus the wider electrification needs of EVs and the like, caught America’s power industry “off guard” after decades of flat demand.

“People in utilities who do forecasting usually haven't been in their jobs since the 1980s. They're just not used to this level of demand growth. I think utilities are really scrambling to catch up, regulators are scrambling to catch up.”

Kunkel said the full extent of gas’s penetration of the data centre sector is still unclear.

“I haven’t seen precise figures on how much of the build-out is proposed to be met with renewables versus gas versus nuclear, things like that. I think the situation is just too dynamic, there's too many new proposals and it's kind of unclear which of them are actually going to get built, because we're in this boom cycle and not everything that's being thrown at the wall is going to stick.”

It should also be noted that while most prominent in the US, the link between big data and gas is also rearing its head in Europe. Operators in data centre hotspot Ireland, for example, are actively seeking permission to connect to the nation’s gas grid to get around a moratorium on new links to its under-strain power network.

According to Kunkel, statements over the sustainability of gas-related investments need watching closely. “I'm seeing utilities make statements in their integrated resource plans about how these new gas plants that they're building could be converted to hydrogen or could have carbon capture and storage installed.

“But the reality is that those technologies are nowhere near at the scale to deploy for the vast build out of natural gas power plants that we're talking about. And so it really feels like we're locking in at least 30 years of new gas fired power with a very, very speculative promise that they might become carbon neutral at some point in the future.”