Why Google Is Winning the Race for Data Center Power
There’s no doubt now that the tech companies driving AI will have to help produce the new electricity needed to power it. The White House and several governors sought Friday to force them to build more plants.
That’s why Google’s $4.75 billion deal in December for Intersect, a developer of renewables and data center infrastructure, is so significant. Google has already been working with partners like Intersect to produce its own power and send some of it back to the grid. It said Friday: “We agree data centers should pay their own way. For us, it is table stakes.”
Recently, I got on the road to see what Intersect is doing and how that positions Google as the politics around power grow heated. I visited a transformer factory in Memphis, Tenn., and drove through the flat, endless Texas Panhandle.
Intersect is one of the largest customers of some of the most sought-after items in the power supply chain, so it has a choice place in line for items with a long lead time, including grid equipment like transformers and U.S.-made solar modules.
Intersect also scouted out giant land tracts over the past decade that could host clean energy plus industrial customers—like a data center. It has already secured grid connections and many needed permits. It has an estimated 8 to 10 gigawatt pipeline in development (equivalent to the power required for eight to 10 medium-size cities), while many AI builders are only now getting in line.
In Memphis, I stood next to—and was dwarfed by—a large power transformer bound for one of Intersect’s sites. Workers at a state-of-the-art factory, where new customers face a four-year wait, had just finished building it. Intersect had more orders underway.
Transformers can convert wind and solar power to voltages that allow it to flow onto the grid or to a big power user such as a data center. The largest ones are literally precious—made in clean rooms by craft laborers who train for years to wind ropes of copper around paths that can’t deviate more than a millimeter. Teams then move the transformer into a cavernous chamber to test its ability to withstand lightning strikes.
The factory is owned by South Korea’s Hyosung HICO Ltd., a subsidiary of Hyosung Heavy Industries. HICO’s U.S. head, Jason Neal, showed me a silver-and-gold rodeo belt buckle that Intersect gave him as a memento of their years working together. It’s on display behind glass in the factory’s lobby.
Earlier this month, I traveled to a future Intersect wind and solar field in Hereford (pronounced HER-ferd), in the Texas Panhandle. Hereford raises more cattle on feed lots than anywhere else on the planet. But there’s still ample space left on these sunny and windy grasslands to build Central Park–size computing campuses. When there’s not enough wind or sun to produce renewable energy, the data center can fulfill its power needs by putting a proverbial straw into three nearby gas pipelines coursing below ground.
Although solar panel frames were still stacked in a fenced yard, this was no ordinary empty field. The 1 GW (city-size) interconnection that Intersect has secured from the Texas grid gives it the option to be a power taker or power giver. Many renewables sites can’t get interconnections to sell their excess power, and these access points are fully sold out until more transmission lines get built, years from now. Last year, Google’s data center energy chief, Amanda Peterson Corio, stated that its projects with Intersect “will bring new generation capacity to the electric grid” instead of “taking capacity away from the grid.”
Intersect’s previous plan was to sell its renewable power to produce hydrogen from electrolyzers. So-called green hydrogen can be used to reduce emissions in heavy industries like steel or fertilizer production. Intersect pivoted the site last year to data center development.
Intersect has done several things differently than most renewables developers. First, it built a lean team and kept its number of projects small, supersizing each site rather than scattering small sites across the country.
Second, it owns its power. Most developers finish their projects and immediately sell them to lower their risks. Intersect held on to its projects, believing that industrial users or utilities would pay up for large amounts of power. As Intersect CEO Sheldon Kimber said in a recent podcast, “Why…sell the coffee beans for such a low price when you could charge people five bucks for a latte?”
The approach helped Intersect this year when renewables lost some tax advantages under President Donald Trump and competitors faced cash crunches. Its already-operating assets, which weren’t part of the Google deal because those assets have other investors and customers, were still throwing off cash to meet debt obligations.
Google is paying a premium for Intersect, especially if you compare the number to what others have paid for power assets. Amazon just agreed to spend $83 million for a distressed 1.2 GW solar project in bankruptcy in Oregon from Pine Gate Renewables. On a per-gigawatt basis, Google may be paying six times more.
But the numbers make sense. Intersect’s estimated 8 GW to 10 GW of power in development could be ready or well underway by 2028. That’s a big number in a short time frame. And it’s in addition to the advantages offered by Intersect’s experienced team and its front-of-the-line spot for transmission gear, plus land, interconnections and regulatory approvals.
Google’s deal to buy Intersect, after partnering with it for a year, highlights two significant facts about energy in the U.S.: First, in sunny and windy regions, renewables are cheaper and faster to install than fossil fuel right now. Kimber told me last year, before he sold to Google, that Intersect is ready to prove that running data centers on solar, wind and battery backup, with on-site natural gas as swing power, is one of the fastest, cheapest and cleanest solutions for AI.
Grid power typically uses 40% gas, but Kimber has previously said Texas could potentially supply up to 70% of power from wind and solar backed by batteries, and he can firm up this power with on-site, small-capacity gas turbines that ramp up and down. This frees Google from the widely lamented wait of five to seven years for much larger gas turbines and significantly lowers its grid-power needs. It also reduces greenhouse gas emissions, a priority for Google.
The other compelling factor here is that Texas, with its unique free-market, stand-alone grid, has become a destination for data centers and renewable energy. President Trump has a harder task jump-starting power plants in the highly regulated Northeast.
Controlling your own destiny out on the range beats waiting on officials in other markets to debate how to ration public power resources and connect you to them. Kimber calls Texas the “Disneyland of Energy.”
“You put it in a petri dish, this is what grows,” Kimber said. “You can put your green hat completely aside—this is the cost-effective, quick-to-market, reliable power solution.”
In other news about hyperscalers and their AI footprint:
- Microsoft is partnering with Midwest grid operator Midcontinent Independent System Operator, or MISO, to modernize grid orchestration and management using AI. Microsoft also announced community pledges to cover its data centers’ power costs, replenish more water than it uses, and increase the job and tax base in communities that host its AI infrastructure.
- Meta Platforms’ deal to buy nuclear power capacity from existing plants in Ohio met with criticism from prominent energy expert Jesse Jenkins of Princeton University, who accused it of cannibalizing public resources and driving up power prices versus adding new clean supply. Google is a funder of Jenkins’ research.
- What uses more water, an In-N-Out burger store or Elon Musk’s Colossus 2 data center? SemiAnalysis took on the challenge and found that Colossus 2 uses more, but only the equivalent of 2.5 In-N-Outs, less than most might guess.
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