Data-Centered

What’s going on here?

Microsoft shook on a mammoth deal with Brookfield Asset Management to add more renewable energy to the grid, all to support the tech titan’s power-hungry data centers.

What does this mean?

The widespread use and development of AI means that data centers – massive warehouses packed with computing gear – are whirring away like never before, with Microsoft alone opening a new one every three days. Problem is, these data centers suck up a ton of electricity, which is putting a damper on Big Tech’s efforts to flaunt their eco credentials. So to clean up its act a little more, Microsoft has announced a partnership with Brookfield Asset Management that will bring another 10.5 gigawatts of renewable energy to the grids that power the firm’s data centers – enough to power nearly two million homes.

Why should I care?

For markets: Utility companies are getting a rebrand.

The International Energy Agency projects that global power demand for data centers will hit over 1,000 terawatt-hours by 2026. For context, that’s the entire annual electricity consumption of Japan. And predictions are only moving in one direction: forecasts for electricity demand growth in the US – home to a third of the world’s data centers – in five years’ time have doubled over the past 12 months. So while utility companies are usually one of the stock market’s more boring corners, they may just offer a savvy way to benefit from the AI boom.

The bigger picture: Tech needs to choose a North Star.

The more energy data centers need, the less likely it is that intermittent renewable power will be able to keep up. So as one of the few energy sources that can deliver reliable, round-the-clock power, natural gas could be around for longer than most folk think. After all, tech firms deciding between making money from AI and saving the world is hardly Sophie’s Choice.

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Originally Posted May 1, 2024 – Data-Centered