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Microsoft has agreed to back an estimated $10bn in renewable electricity projects to be developed by Brookfield Asset Management, in a deal that underscores the race to meet clean energy commitments while satisfying the voracious energy demand of cloud computing and artificial intelligence.
The “global framework agreement” signed by the Seattle-based tech giant is a commitment to bring 10.5 gigawatts of generating capacity online, or enough to power the equivalent of about 1.8mn homes. The power will be added to the grids from which data centres draw electricity.
Brookfield said the capacity was about eight times larger than the previous single biggest corporate renewable electricity purchase agreement, a deal between the mining company Rio Tinto and an Australian solar farm.
Microsoft expects its partnership with Brookfield to help finance the creation of large new wind and solar farms to be built between 2026 and 2030, beginning in the US and Europe. Adding 10.5GW of new capacity would cost more than $10bn, based on recent industry trends.
It comes as the frenzied interest in generative artificial intelligence has sparked concerns about their intense energy demand and associated carbon emissions.
By 2026, the International Energy Agency expects data centres could globally consume more than 1,000 terawatt-hours of electricity, more than double 2022 levels, roughly equal to Japan’s total electricity usage.
The US, which is home to a third of the world’s data centres, is experiencing rapidly growing electricity demand for the first time in two decades, spurred in part by the power-thirsty centres. Five-year forecasts for the growth in electricity demand in the US have nearly doubled in the past year from 2.6 per cent to 4.7 per cent, according to a report from Grid Strategies.
The anticipated demand has raised alarm from energy watchdogs over whether antiquated power grids can meet the surge in consumption without slowing the move to renewables or posing a threat to reliability.
The initial agreement is almost three times larger than the 3GW of power used by data centres in Virginia — the world’s largest hub for such facilities — that source energy from Dominion Energy, the area’s largest electric utility company.
It would also account for a significant piece of overall renewable energy generating capacity in the US and Europe. The US added 33.8GW of utility-scale renewable energy projects last year, the highest amount on record, bringing the total renewable capacity on the grid to 262GW, according to American Clean Power, an industry group.
While tech companies including Amazon and Google have signed new renewable energy deals, multiple fossil fuel and power executives have told the Financial Times that the electricity needed to meet the demand for AI will require higher natural gas consumption given the intermittent nature of renewable generation and the nascent battery storage buildout.
Wind and solar made up about 14 per cent of US electricity generation last year, while natural gas, the largest source of the country’s power, made up 43 per cent, according to the Energy Information Administration.
Brookfield is one of the world’s largest developers of renewable power; its US-listed company Brookfield Renewable has about 33GW of operating renewables assets, including wind, solar and batteries, around the world, and a further 155GW in development.
It has expanded over the past few years with deals to buy much smaller rivals including the renewable energy business of the UK’s Banks Group — which it has since renamed OnPath Energy — last year, and US-based renewable energy developer Urban Grid in 2022.
Renewables developers are increasingly striking long-term power deals with large corporations, helping both sides get some certainty over long-term power prices. In addition to Microsoft, Brookfield has announced power purchase agreements with Amazon.
Corporate deals covering a record 46GW of solar and wind capacity were announced in 2023, with Amazon the top purchaser, according to figures published in February by Bloomberg New Energy Finance.
Microsoft has committed to ensuring 100 per cent of its electricity consumption is “matched” 100 per cent of the time by “zero carbon energy purchases” by 2030, using mechanisms including power purchase agreements and renewable energy certificates.
“Microsoft wants to use our influence and purchasing power to create lasting positive impact for all electricity consumers,” said Adrian Anderson, the company’s general manager for renewables.
