There is a fundamental disconnect between the surging demand for clean energy to power AI and what energy companies can actually do to meet that demand in a sustainable way.
Big Tech companies are racing to build more data centers to handle the expected adoption of AI tools and the training required to create them. And they want those data centers operational within two years, said Enrique Bosch, director of corporate innovation at Avangrid, a clean energy company owned by Iberdrola.
But at the same time, the energy sector responsible for supplying Big Tech with enough energy for the power hungry facilities is slow-moving and heavily-regulated. Don't count on new energy plants and the necessary infrastructure being ready in time.
“It takes many, many years to deploy sufficient [energy transmission] lines, for example,” Bosch explained at Fortune's Brainstorm AI conference in San Francisco this week. “We will talk about different ways to create new [energy] generation through renewables, nuclear or even natural gas, but it’s a challenge because our clients are asking for permissions in the next year or two.”
For example, a project to create a 145-mile transmission line to deliver 1,200 megawatts of Canadian hydropower to New England has been in the works since 2017. It has faced several delays, including regulatory and legal challenges as well as opposition from competitors.
Bosch explained that transmission projects typically take five years or more to complete. Translation: Big Tech's expectations are out of sync with reality.
A number of Big Tech companies are either considering or already generating power directly next to their data centers, which frees them from having to wait for new transmission lines. For example, Elon Musk’s xAI supercomputer project in Memphis, which launched in July, has faced criticism from community environmental groups because it allegedly uses natural gas-burning turbines on-site without obtaining necessary permits.
Bosch said his company is studying potential projects that would work outside of the grid in specific areas. Examples include building data centers next to wind farms in remote areas or near nuclear power plants in Virginia. “We need to also evaluate the development time for all of the options on the table," Bosch said. "My guess is it’s very specific depending on where you are developing.”
