Not So Green GPT

This Week's Trend In Brief:

• Last week, Microsoft announced a $10 billion deal with major energy developer Brookfield Asset Management to develop renewable energy capacity for its data centers, which are expanding significantly to meet AI data needs.
   

• The move comes as scrutiny on AI’s power consumption demands is growing rapidly, and it’s not the first time an emerging technology caught policymaker and stakeholder attention over its power use.
   

• As cryptocurrency mining scaled aggressively and sought more electricity to meet its needs, the industry found itself facing Congressional opprobrium, state legislative crackdowns, and environmentalist pressures.
   

• Indeed, the U.S. technology sector already uses “as much energy as a small country,” and as we noted two months ago, U.S. utilities are struggling to meet the immense energy needs of AI, cryptocurrency, electric vehicles, and building decarbonization. 
   

• Companies like Microsoft and their energy developer partners hope to leverage new green energy resources to meet these needs, but solar and wind resources could prove insufficient, which has companies examining more realistic near-term power sources, such as natural gas and nuclear energy.
   

• Even with generous federal subsidies, bringing new renewable projects online has never been harder, even as the tech and power sectors face immense pressures to go green. To help them navigate these pressures without slowing down the rapid expansion of critical new technologies, public affairs professionals and the companies they represent need a proven playbook to not only keep pace with the developments but stay two steps ahead of the challenges they may present. 

Digging Deeper:

 
Last week, Microsoft announced a $10 billion deal with major energy developer Brookfield Asset Management to develop renewable energy capacity for its data centers, which are expanding significantly to meet AI data needs. Microsoft, which has pledged to be carbon negative by 2030, declared the company “wants to use [its] influence and purchasing power to create lasting positive impact for all electricity consumers” by “delivering [on its] goal of achieving 100% of our electricity consumption, 100% of the time.” Brookfield CEO Connor Teskey celebrated the “first of its kind agreement, which is almost eight times larger than the largest single corporate PPA ever signed,” as a major step in “the global trend of digitalization and the adoption of AI.” Both Microsoft and Brookfield heralded the deal as an essential part of meeting climate goals at a time when companies across the market need more energy than ever.
 
The move comes as scrutiny on AI’s power consumption demands is growing rapidly, and it’s not the first time an emerging technology is catching policymaker and stakeholder attention over power usage. For years, as cryptocurrency mining scaled aggressively and sought the electricity to meet its needs, the industry found itself facing Congressional opprobrium, state legislative crackdowns, and environmentalist pressures. Last year, U.S. Rep Jared Huffman (D-CA) and Sen. Edward Markey (D-MA) introduced legislation aimed at cracking down on crypto’s environmental impact. Huffman warned, “Granting this industry impunity to run rampant is a risk to the health and safety of our communities and planet,” while Markey claimed crypto companies were “skyrocketing greenhouse gasses, just so they can make a buck for themselves.” Similarly, state lawmakers across the U.S. have targeted crypto for legislative oversight, with New York even approving a moratorium on the industry. Meanwhile, environmental groups insist crypto must “adopt more climate-friendly practices” even if it is “a steep and maybe impossible uphill climb.” Now, AI has fallen under a similar spotlight.
 
Indeed, the U.S. technology sector is already using “as much energy as a small country,” and as we noted two months ago, U.S. utilities are struggling to meet the immense energy needs of AI, cryptocurrency, electric vehicles, and building decarbonization. While AI continues to ramp up across the market, “aging infrastructure and reliability challenges across the country are preventing utilities from meeting the rising energy needs,” and the data centers and clean-technology factories growing around the country are only adding to that burden.” New reports show that it is difficult to predict the energy demands for AI, as “The generative AI revolution comes with a planetary cost that is completely unknown to us” and “The question of whether efficiency gains will offset rising demand and usage is impossible to answer.” Some have argued AI can help in meeting these energy demands as “an enabler for cleaner energy deployment,” and some federal lawmakers have contended generative AI “has the opportunity to accelerate legal and regulatory efforts, including accelerating permits.” Companies hoping to build the AI revolution have acknowledged the need to go green and AI’s potential role in the transition, but like with cryptocurrency, “it’s easier said than done.”
 
Companies like Microsoft and their energy developer partners hope to leverage new green energy resources to meet the rising demand, but relying solely on solar and wind energy could prove insufficient, which has companies examining more realistic near-term power sources, such as natural gas and nuclear energy. Riding the AI wave, renewable energy stocks have boomed as utilities across the U.S. prepare “for historic increases in electricity demand led by data centers and AI.” NextEra CEO John Ketchum contended “renewables and storage are a key enabler to help meet this increased demand,” with “the potential to be 3x bigger over the next seven years compared to the last seven.” However, even with the potential for renewables to play a major role in AI, “energy experts are concerned the US power grid isn’t prepared to handle the wave coming its way.” Industry experts argue “data and AI must become more sustainable,” but questions about grid reliability and the immediate potential for renewables mean companies may find themselves looking at short-term solutions to energy demand. These concerns have left natural gas producers “bullish on demand” in the face of AI’s vast energy needs while some companies see nuclear as “a potential alternative to gas” that “has the advantage of providing carbon free energy.”
 
The intersection of AI expansion and energy demands presents a complex landscape for public affairs professionals in the energy industry at a time when bringing new renewable projects online has never been harder, even with generous federal subsidies and immense pressures on the tech and power sectors to go green. Microsoft’s decision to ink a $10 billion deal to develop renewable energy capacity for its data centers and AI operations shows major companies are taking these pressures seriously. But the reality is the hard work comes after such deals are signed in today’s operating environment in which getting projects approved comes with ever-increasing legal, regulatory, and environmental hurdles. To help them navigate these pressures without slowing down the rapid expansion of critical new technologies, public affairs professionals and the companies they represent need a proven playbook to not only keep pace with the developments but stay two steps ahead of the inevitable delays and disruptions.

Trends in Energy is your weekly look at key trends affecting the energy industry, brought to you by the competitive intelligence experts at Delve. As the political and regulatory landscape continues to shift, reach out to learn how our insights can help you navigate these challenges.

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