Fossil fuel surge to power AI sparks advocacy for clean energy sources

Amazon Web Services data center is visible on Aug. 22, 2024, in Boardman, Ore. (AP Photo/Jenny Kane)

HARRISBURG, Pa. — As the explosive energy demand of artificial intelligence spurs a renaissance for fossil fuels, renewable energy allies are trying to ensure that massive data centres will be powered by climate-friendly sources, too.

Lawmakers in states with stronger climate policies don’t want data centres to hinder their goal of slashing planet-warming greenhouse gas emissions.

In other states, environmental advocates and corporations with clean energy goals are working regulatory levers to push monopoly utilities that historically control the energy supply and grid access.

The problem clean energy proponents are confronting is that tech giants are demanding power at such speed and scale — some data centers consume more energy than a mid-size city — that the construction of wind and solar simply can’t keep up.

As a result, the AI boom has set in motion the biggest-ever construction boom of natural gas-fired power plants, not to mention moves by utilities, power plant owners and the federal government to keep aging coal-fired power plants operating past their previously scheduled retirement dates.

Legislation on the desk of New York Gov. Kathy Hochul would require data centers over a certain size to meet renewable energy benchmarks starting in 2030 and, by 2040, get at least 90 per cent of their energy from renewable energies. The bill’s author, state Sen. Kristen Gonzalez, a Democrat, said the targets are realistic.

“We are literally talking about the wealthiest companies in the world that are looking to build in New York state, and if they have the resources to put billions of dollars into data center development, then they certainly should have the resources to build out renewable energy sources to power them,” Gonzalez told The Associated Press.

Worries that AI’s energy demands will scuttle climate goals

Michigan, Oregon and Minnesota led the way, enacting laws in the last 18 months designed to protect their pre-existing requirements that electric utilities use only emissions-free energy sources by 2040.

“That’s a challenging thing to meet with the data centres,” said Bob Jenks, executive director of the Oregon Citizens’ Utility Board, a nonprofit that advocates for lower utility bills and cleaner energy. “It was a challenging thing to meet without the data centers.”

Minnesota and Oregon ordered regulators to ensure that the energy that supplies data centres is in line with their emissions-reduction goals, while Michigan required hyperscale data centers to meet a clean energy requirement — 90 per cent within six years — to access its lucrative sales tax exemption.

Bills with similar provisions emerged in more than a half-dozen states, including California, Illinois, New Jersey, Pennsylvania and Virginia.

“We just can’t do business as usual with a demand at this scale and facilities of this scale because the impacts are massive,” California state Sen. John Padilla, who sponsored a bill in his state, told the AP.

Pushing utilities to expand access to the power grid

Along with gas projects, tech giants like Google are investing billions into their own zero-emissions projects like solar, wind, geothermal, nuclear or battery storage.

Tech giants often find themselves confronted with utilities that can’t promptly supply the kind of power they need. So they — along with environmental groups, energy entrepreneurs and business associations — are trying to persuade regulators to expand access to the grid, including in states where legislators are averse to clean energy mandates.

Greg Robinson, whose Raleigh, North Carolina-based firm Aston Power helps procure power for data centres and other big energy users, likened it to the growth of FedEx when the business world decided that the U.S. Postal Service was too slow.

“Then business said, ‘Hey we’re doing more things now, the postal service is not keeping up so maybe there’s an opportunity for a new service,’” Robinson said.

Part of the exercise has been convincing utilities — which profit by building power plants and transmission infrastructure — that this won’t threaten their bottom lines, clean energy advocates say.

For one, utilities will get to connect a power source that they don’t have to charge customers for, especially at a time when electricity bills are rising quickly in many utility territories.

Utilities also get a large, long-term energy customer that pays them to expand the grid, instead of watching big customers build standalone power sources.

Regulators are greenlighting renewable energy projects

Last year, clean energy advocates persuaded Colorado regulators to order the state’s largest electric utility, Xcel Energy, to create a program to let big power users build clean energy projects that can be connected to the grid.

In an April regulatory filing, Xcel Energy said it agreed that a program could benefit customers, and cited two Google projects — one in Nevada to connect 115 megawatts of geothermal energy and another in Minnesota to connect 1,900 megawatts of wind, solar and battery storage — that were approved through similar programs.

Still, a fight over how Xcel Energy wants to design the program looms with clean energy advocates in front of state regulators.

Google’s agreement with NV Energy, Nevada’s largest for-profit utility, received approval from regulators last year and is widely viewed as the first of its kind. Google says it now has similar concepts approved or under consideration in eight other states, including Indiana, Kansas, Missouri and South Carolina.

The Corporate Energy Buyers Association — whose members include tech giants and large corporations — hammered out an agreement with Georgia Power, approved by state regulators there earlier this year, to allow their members to build clean energy sources and connect them to the grid.

They are now seeking something similar in North Carolina.

“These innovations are actually some of the most incredible and understated innovations we’re going to see in regulatory and energy procurement,” Nidhi Thaker, CEBA’s senior vice president of policy, told the AP. “And I think the actions that are being taken right now are actually going to set energy policy for the next two to three decades.”

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Follow Marc Levy at http://twitter.com/timelywriter

Marc Levy, The Associated Press