The world faces a juxtaposition as we expand both artificial intelligence and renewable energy at a breakneck pace.
AI datacenter projects multiply by the day, requiring astronomical amounts of energy which grids are having trouble keeping pace with. I’m sure many of you will have considered - and questioned - how we can sustain such growth in energy demand, particularly if we are to energize these datacenter with clean energy. Some schools of thought cast doubt on whether energy professionals should work with datacenter developers. I’ve had people ask me whether I feel any moral dilemma in facilitating datacenters’ connection to the grid.
My thinking around the topic is this: the majority of us are using AI in our day-to-day. Some are just starting out. Some refuse to use it at all. These are all valid perspectives. But regardless of your view on AI, we can all likely come to terms with a common truth: AI isn’t going anywhere. Datacenters will go up one way or another, in massive numbers. Their energy demands will grow in parallel. What is critical at this point in time is that energy leaders apply our expertise to help facilitate AI growth as sustainably and low-carbon as possible.
To cite a recent example of why it is important we do this, Nvidia and OpenAI have announced a partnership through which OpenAI will deploy over 10 gigawatts of new Nvidia-based AI datacenters in coming years. Nvidia in turn will invest up to $100 billion in OpenAI as the project progress, the first of which is set to be operational by late 2026.
10 gigawatts is enough energy to power a small country. The importance of developing these mega-projects with a decarbonization mindset is paramount. If we don’t, we will find ourselves in 2035 facing even greater energy challenges than we do today - picture a lack of consistent energy supply across all nations and even higher carbon emissions just to try and keep pace.
Realistically, it’s not feasible at this time to power datacenters with 100% renewable energy at scale. Datacenters are 24 hours a day, 7 days a week, 365 days a year, and they require consistent, reliable, quality energy at all hours of the day. No breaks, no waiting for the sun to come out or the wind blow - energy must be on hand at all times. which is (currently) very difficult to achieve solely with renewables. While 100% renewable energy has been achieved in some datacenters, we simply aren’t there yet in powering the vast majority solely with clean energy.
Although datacenters can’t be 100% renewable today, we can be very smart about the energy mix we develop for these major energy off-takers. A strategic combination of renewable energy from the grid, battery systems, grid stability technology, and small gas turbines can meet nonstop energy demands with low carbon emissions.
What’s more, most datacenter developers aspire to power their datacenters carbon-free, already investing heavily in creative solutions. Tech majors are extremely well-financed and are willing to pay a premium for solutions which will reliably energize their datacenters, while at the same time help advance their decarbonization goals. The right approach will both protect their assets today and in the future, as well as boost their brand image.
So how do we approach this optimal mix of energy reliability and carbon mitigation?
It starts with renewable energy from the grid and choosing datacenter locations where this connection can be made. Most major utilities are on track to hit at least 80% renewable energy by 2030 - developing more and more renewable projects to meet datacenter expansion - so this first line of production is keeping pace. Peak times on the grid will allow for less energy to be provided to datacenters, which is where additional solutions come in.
We must also mention grid protection. Datacenters operate to extremes - causing massive energy load spikes and dips as AI workloads fluctuate in sub-second timeframes. To prevent these spikes from severely interrupting (faulting) the grid and causing blackouts, support devices such as StatComs, E-StatComs, and Synchronous Condensers can be installed at key points to smooth load spikes and balance energy flow.
These devices, commonly known as FACTS (flexible AC transmission system), can be co-sourced as part of the service agreement between utility providers and datacenter developers. They help ensure quality energy to both commercial and residential customers. We’ll go into more detail on these in a future edition.
The next line of defense for datacenters? Large-scale battery systems. Bonus points if you can add onsite solar or wind collection to help keep them charged rather than pulling from the grid. The aforementioned load spikes at datacenters can occur within milliseconds - a near impossible response time for any grid. If the spike is big enough, it can cause grid instability up- and downstream from the datacenter.
Batteries, however, can respond in milliseconds. And while they generally do not hold enough energy to power a datacenter for very long, they are powerful enough to near-instantaneously push or absorb sufficient energy to smooth load spikes. These vital assets, called BESS (Battery Energy Storage System) are connected only to the datacenter, providing exclusive 24/7 energy availability.
Onto our final line of defense. Particularly as global temperatures rise and peak summer energy demand continues to grow, there will unavoidably be times when the grid simply cannot provide sufficient energy to datacenters. There will be outages and brown-/blackouts as rising temperatures strain our infrastructure and lead to more severe wildfires. Modular gas turbines are the solution to mitigate this risk. Think of a large, onsite jet engines run on natural gas (low-carbon) and, eventually, on hydrogen (carbon-free). These turbines can produce enough energy to run datacenters for hours and even days - providing the final fail-safe required.
While natural gas emissions are the lowest of common fossil fuels, they still produce GHG emissions, and mitigating turbine exhaust should be a focus wherever possible. Carbon Capture & Storage (CCS) systems can be installed to collect CO2 at the turbine exhaust, bringing air-bound emissions to near-zero. Not all turbines are compatible today but CCS technology is advancing quickly and most major datacenter developers are already exploring it, even using it in some cases.
Possibly the most vital piece underlying these innovative solutions is the ability to bring them into operation. Planning, procurement, stakeholder management, and construction can span 3-5 years for some of these projects.
There are countless moving parts, vendors, invested parties, and supply chain constraints which must be tactfully and efficiently orchestrated - particularly for these alternative energy sources to be in service by the time datacenters require them (generally 2-3 years).
A robust Project Management Office (PMO) and comprehensive project controls are required to stand up an efficient business unit around this work. Acting essentially as an entirely new part of your organization to manage schedules and stakeholders, wrangle vendors and stay ahead of long procurement lead times - the PMO maintains tight oversight across all workstreams.
In summary, the AI boom can be facilitated in a way which minimizes its harmful impacts, and tech developers are generally keen on this approach. We must also keep in mind that we - the general consumer and shareholder - are the ones setting the rapid pace of expansion expected of these companies. And that’s ok - but it also means we have a responsibility to help them grow sustainably.
Best,
Max P Frank
P.S. - If you’re interested in learning more about the strategic perspectives I can offer in this space, please reply to this newsletter and we’ll set up a more in-depth discovery of your unique challenges. Cheers!