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The effort to preserve the beloved landmark from sea-level rise epitomizes an existential struggle for historic waterfronts
When San Francisco’s Ferry Plaza Farmers Market is in full Saturday swing, one way to dodge the determined foodies and casual browsers is to retreat to the plaza just 30 steps south of the Ferry Building. It sits atop three tiers of dark-veined granite, accessible by two flights of nine stairs or a ramp that ascends along the water to a trio of ferry gates that, like the plaza, were completed in 2021.
The chosen height hints at what someday might be the norm — the elevation where San Francisco’s constructed shoreline will need to be to serve as a protective buffer between the natural bay and the developed city. Here, more than any place on today’s Embarcadero, you confront the existential predicament facing the Ferry Building, nearby piers, and resurrected waterfronts in other coastal American cities: sea level rise.
According to projections that were modeled by climate scientists in 2018, San Francisco Bay faces a 66% likelihood that average daily tides will rise 40 inches by 2100, with roughly half of the increase during the next 50 years and the pace accelerating after that. The same report includes an extreme but peer-reviewed scenario where the projected increase soars to 93 inches during that same period — making grim numbers profoundly worse.
So-called king tides already arrive monthly during the winter, a natural occurrence related to the moon’s gravitational pull that can send waves washing past Pier 14 into the Embarcadero’s protected bike lane. Behind Pier 5, water swells up and over the edge of the public walkway. For now, that occasional splash of excitement is less fearsome than fun — but if current forecasts are anywhere near accurate, future generations will face a double bind.
The threat isn’t just that tides might creep upward as temperatures increase. It’s that the extreme rainfall patterns we already experience will grow more intense, those destructive storms that in recent years have introduced terms like atmospheric rivers and bomb cyclones into conversations about the weather. For instance, if daily tides are a foot higher in 2050 than they are now — the “likely” projection — a major storm could surge 36 inches beyond where it would register today.
In the case of the Embarcadero, the hypothetical one-foot rise coupled with an “intense storm” — the sort that in the past might occur every five years — would send bay waters rushing toward the roadway in a dozen locations if the storm hit when winds were brisk and the tide was high. Kick the downpour’s fervor to the scale of the bomb cyclone that hit the Bay Area in October 2021 — a day-long deluge that was the equivalent of what scientists call a 25-year storm — and the Embarcadero could be closed for nearly a mile between Folsom Street and Pier 9. Water spilling across the roadway could flow down into the BART and Muni subway beneath Market Street, potentially paralyzing both systems.
The new plaza and the elevated ferry gates might rebuke the surging tides to come, but the landmark next door would be more vulnerable than ever. The Ferry Building has ridden out many perils since opening day in 1898, from earthquakes and the onslaught of automobiles to political tumult, misguided renovations, and the wear and tear of urban life. Now it faces the implacable though seemingly far-off threat of rising waters, as if nature was determined to restore the marshes and tidal flats that long-dead San Franciscans covered and forgot.
The addition of the granite plaza is an indicator of the danger facing the icon to its north. And it’s not as if our hefty landmark with that vaulted concrete foundation can be jacked up out of harm’s way.
Or can it?
An aerial view of San Francisco’s Ferry Building and the Embarcadero.Michael Lee/Getty Images
Steven Reel headed west from Philadelphia in 1992 to earn a structural engineering degree at Stanford University because, he says now, “structural engineering means ‘earthquakes’ at Stanford, and earthquakes make structural engineering a lot more interesting.” The Bay Area was a good place to live, and local governments were investing heavily in seismic upgrades after the 1989 Loma Prieta earthquake. In 2010, Reel successfully applied for a job at the Port of San Francisco and, to his surprise, grew intrigued by the historic aspects of making an urban shoreline function in the here and now.
“I’d start studying old engineering drawings for projects and then go down the rabbit hole,” recalls Reel, an easygoing bureaucrat with a beard that approached Rasputin-like proportions during the pandemic (he since has trimmed it back). He also began to notice regional planners stressing sea level rise in meetings.
His first project at the port was Brannan Street Wharf, where two ramshackle piers midway between the Bay Bridge and the ballpark were torn out and replaced by a four-hundred-foot-long triangular green. The response to climate concerns involved a slight upward incline from the Embarcadero promenade and a concrete lip along the edge (the same move since used for the plaza near the Ferry Building).
There was another natural threat to consider — the possibility that a tremor on the scale of the Great 1906 San Francisco Earthquake could strike again. Would the Ferry Building and the seawall hold, as before? Or would the three-mile-long agglomeration of boulders and concrete give way after all this time? Reel found himself with a new job title — manager of the seawall program — and responsibilities that included a $450,000 study with consultants being told to diagnose the barrier’s health and prescribe possible remedies.
The findings, released in April 2016, answered some questions and posed a host of others.
The good news is that even with a cataclysmic earthquake, “complete failure of the seawall is unlikely.” The rocks and boulders that form a dike beneath the concrete wouldn’t scatter like marbles. The Financial District wouldn’t be sucked into the bay toward Oakland. But the combination of sandy fill atop soft mud, behind an aged barrier with thousands of potentially moving parts of varying size, is a dangerous combination. The fill was “subject to liquefaction,” the report confirmed, making it likely that the seawall could slump and lurch outward.
“A repeat of the 1906 earthquake is predicted to cause as much as $1b in damage and $1.3b in disruption costs,” the report declared. Better to strengthen the entire three-mile seawall before a disaster struck — though the cost estimates to do this were “on the order of $2 to $3 billion.” The consultants also emphasized that even with an upgraded seawall, the slow-moving threat posed by sea level rise “will necessitate intervention ... over the next 100 years.” Figure that in, and the combined price tag approached $5 billion.
The city approached voters with a $425 million bond in 2018 to fund the first round of projects; smartly, the campaign emphasized seismic concerns, lightening the ominous message with such creative touches as a neighborhood brewpub’s limited-release sour beer dubbed “Seawall’s Sea Puppy.” The bond passed with 83% support. “The earthquake message resonates,” Reel says. “Without it, I don’t think all this would have moved forward as it did.”
It makes sense to tackle the easiest fixes early, given the seismic threats posed to the Bay Area by the San Andreas and other faults. Breaking a daunting future into manageable parts also allows the Port and City Hall to shift attention from the more eye-popping aspects of climate adaptation — such as how potions of the Embarcadero might need to be raised as much as seven feet to prepare for 2100’s more extreme projected water levels.
Which leads us back to the Ferry Building.
As so often has been the case during the landmark’s history, far more is at stake than one particular structure. If the Ferry Building in its heyday represented San Francisco’s prominence within the region and beyond, in the 21st century it embodies how urban waterfronts can be reinvented without sacrificing their past identities. At the same time, the building remains essentially the same as it was in 1898 — a heavy structure of concrete and steel that covers two acres and rises from a foundation atop bundled piles of tree trunks.
The assumption for the past 25 years has been that the landmark’s impressive performance in 1906 and 1989 should ensure similar resilience when the next big earthquake hits. But the most recent geotechnical exam revealed a weak link: the section of the seawall behind the Ferry Building rests in a trench filled with liquefiable sand rather than the rubble that underlies almost everything else. That detail places “the 125-year-old Ferry Building Seawall, building substructure, and surrounding piers at risk of damage in large earthquakes,” according to the most recent Port update.
This isn’t just a concern for architecture buffs. San Francisco’s disaster relief plans treat the outdoor spaces around the landmark as crucial spots for retreat and regrouping. In a worst-case scenario where the Bay Bridge is knocked out of commission, as was the case in 1989, reliable access to a functioning ferry system will be crucial for evacuating people from the downtown scene safely. The new plaza can also serve as a staging area for bringing medical aid and supplies into the city over the water. Regular people who need to connect with family and friends know there won’t be confusion if someone says “let’s find each other at the Ferry Building.”
One solution could be to erect an entirely new seawall around the edge of the Ferry Building’s foundation, in essence creating a basement beneath it. And if you’re doing that, it’s only one more step — albeit sure to be costly and complex — to raise the entire building by several feet and resolve the challenge of sea level rise for another lifetime or two.
“With the Ferry Building, the one thing I know about it is that it has to be saved … it has such a strong identification with the city,” Elaine Forbes, the executive director for the Port, says. “So I talked myself into okaying this big expenditure.”
The Ferry Building, pictured in 1906 after the San Francisco earthquake and fire.Library of Congress
Realistically, adaptation planning in San Francisco and other waterfront cities will involve a variety of responses at a variety of scales. But the situation facing the Ferry Building, as at so many times in its history, is unique unto itself. This time around, the task is to remake a bustling civic icon so that life seemingly goes on as before. If anyone has challenged the need to invest what likely will be hundreds of millions of dollars to save a 125-year-old structure, the argument has gained no traction.
“The price would have to be really, really high before anything would think twice” about whether the Ferry Building’s salvation is more trouble than it’s worth, Reel says. He describes how during the public discussions on what to do about the Embarcadero, attendees would be asked to list priorities. What are you concerned about? What do you love?
In the latter category, Reel recalls, “the Ferry Building kept getting named. People want to see it forever.”
This still leaves an array of unanswered questions. How to decide how big of an engineering gamble to take. Whether to raise the structure, as implausible as that sounds, or build a new seawall to the east that would destroy the immediacy of the connection to the water. And what becomes of the tenants inside the building, especially the locally based merchants, if the building once again becomes a construction zone.
In a much different context, one San Franciscan offered a fatalistic take on what the future might hold: Lawrence Ferlinghetti.
Four years before his death in 2021, still living in North Beach, Ferlinghetti sat down in a neighborhood café to talk with a Washington Post writer about the beat era, the 97-year-old poet’s life, and his enduring love for the city that he embraced long ago. At one point, the writer asked Ferlinghetti about what might happen after he was gone.
“It’s all going to be underwater in 100 years or maybe even 50,” Ferlinghetti said with a half-smiled shrug. “The Embarcadero is one of the greatest esplanades in the world. On the weekends, thousands of people strut up and down like it’s the Ramblas in Barcelona. But it’ll all be underwater.”
This article was excerpted and condensed from John King’s book Portal: San Francisco’s Ferry Building and the Reinvention of American Cities, available on Nov. 7 from W. W. Norton & Company ©2023.
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The multi-faceted investment is defense-oriented, but could also support domestic clean energy.
MP Materials is the national champion of American rare earths, and now the federal government is taking a stake.
The complex deal, announced Thursday, involves the federal government acting as a guaranteed purchaser of MP Materials’ output, a lender, and also an investor in the company. In addition, the Department of Defense agreed to a price floor for neodymium-praseodymium products of $110 per kilogram, about $50 above its current spot price.
MP Materials owns a rare earths mine and processing facility near the California-Nevada border on the edges of the Mojave National Preserve. It claims to be “the largest producer of rare earth materials in the Western Hemisphere,” with “the only rare earth mining and processing site of scale in North America.”
As part of the deal, the company will build a “10X Facility” to produce magnets, which the DOD has guaranteed will be able to sell 100% of its output to some combination of the Pentagon and commercial customers. The DOD is also kicking in $150 million worth of financing for MP Materials’ existing processing efforts in California, alongside $1 billion from Wall Street — specifically JPMorgan Chase and Goldman Sachs — for the new magnet facility. The company described the deal in total as “a multi-billion-dollar commitment to accelerate American rare earth supply chain independence.”
Finally, the DOD will buy $400 million worth of newly issued stock in MP Materials, giving it a stake in the future production that it’s also underwriting.
Between the equity investment, the lending, and the guaranteed purchasing, the Pentagon, and by extension the federal government, has taken on considerable financial risk in casting its lot with a company whose primary asset’s previous owner went bankrupt a decade ago. But at least so far, Wall Street is happy with the deal: MP Materials’ market capitalization soared to over $7 billion on Thursday after its share price jumped over 40%, from a market capitalization of around $5 billion on Wednesday and the company is valued at around $7.5 billion as of Friday afternoon.
Despite the risk, former Biden administration officials told me they would have loved to make a deal like this.
When I asked Alex Jacquez, who worked on industrial policy for the National Economic Council in the Biden White House, whether he wished he could’ve overseen something like the DOD deal with MP Materials, he replied, “100%.” I put the same question to Ashley Zumwalt-Forbes, a former Department of Energy official who is now an investor; she said, “Absolutely.”
Rare earths and critical minerals were of intense interest to the Biden administration because of their use in renewable energy and energy storage. Magnets made with neodymium-praseodymium oxide are used in the electric motors found in EVs and wind turbines, as well as for various applications in the defense industry.
MP Materials will likely have to continue to rely on both sets of customers. Building up a real domestic market for the China-dominated industry will likely require both sets of buyers. According to a Commerce Department report issued in 2022, “despite their importance to national security, defense demand for … magnets is only a small portion of overall demand and insufficient to support an economically viable domestic industry.”
The Biden administration previously awarded MP Materials $58.5 million in 2024 through the Inflation Reduction Act’s 48C Advanced Energy Project tax credit to support the construction of a magnet facility in Fort Worth. While the deal did not come with the price guarantees and advanced commitment to purchase the facility’s output of the new agreement, GM agreed to come on as an initial buyer.
Matt Sloustcher, an MP Materials spokesperson, confirmed to me that the Texas magnet facility is on track to be fully up and running by the end of this year, and that other electric vehicle manufacturers could be customers of the new facility announced on Thursday.
At the time MP Materials received that tax credit award, the federal government was putting immense resources behind electric vehicles, which bolstered the overall supply supply chain and specifically demand for components like magnets. That support is now being slashed, however, thanks to the One Big Beautiful Bill Act, which will cancel consumer-side subsidies for electric vehicle purchases.
While the Biden tax credit deal and the DOD investment have different emphases, they both follow on years of bipartisan support for MP Materials. In 2020, the DOD used its authority under the Defense Production Act to award almost $10 million to MP Materials to support its investments in mineral refining. At the time, the company had been ailing in part due to retaliatory tariffs from China, cutting off the main market for its rare earths. The company was shipping its mined product to China to be refined, processed, and then used as a component in manufacturing.
“Currently, the Company sells the vast majority of its rare earth concentrate to Shenghe Resources,” MP Materials the company said in its 2024 annual report, referring to a Chinese rare earths company.
The Biden administration continued and deepened the federal government’s relationship with MP Materials, this time complementing the defense investments with climate-related projects. In 2022, the DOD awarded a contract worth $35 million to MP Materials for its processing project in order to “enable integration of [heavy rare earth elements] products into DoD and civilian applications, ensuring downstream [heavy rare earth elements] industries have access to a reliable feedstock supplier.”
While the DOD deal does not mean MP Materials is abandoning its energy customers or focus, the company does appear to be to the new political environment. In its February earnings release, the company mentioned “automaker” or “automotive-grade magnets” four times; in its May earnings release, that fell to zero times.
Former Biden administration officials who worked on critical minerals and energy policy are still impressed.
The deal is “a big win for the U.S. rare earths supply chain and an extremely sophisticated public-private structure giving not just capital, but strategic certainty. All the right levers are here: equity, debt, price floor, and offtake. A full-stack solution to scale a startup facility against a monopoly,” Zumwalt-Forbes, the former Department of Energy official, wrote on LinkedIn.
While the U.S. has plentiful access to rare earths in the ground, Zumwalt-Forbes told me, it has “a very underdeveloped ability to take that concentrate away from mine sites and make useful materials out of them. What this deal does is it effectively bridges that gap.”
The issue with developing that “midstream” industry, Jacquez told me, is that China’s world-leading mining, processing, and refining capacity allows it to essentially crash the price of rare earths to see off foreign competitors and make future investment in non-Chinese mining or processing unprofitable. While rare earths are valuable strategically, China’s whip hand over the market makes them less financially valuable and deters investment.
“When they see a threat — and MP is a good example — they start ramping up production,” he said. Jacquez pointed to neodymium prices spiking in early 2022, right around when the Pentagon threw itself behind MP Materials’ processing efforts. At almost exactly the same time, several state-owned Chinese rare earth companies merged. Neodymium-praseodymium oxide prices fell throughout 2022 thanks to higher Chinese production quotas — and continued to fall for several years.
While the U.S. has plentiful access to rare earths in the ground, Zumwalt-Forbes told me, it has “a very underdeveloped ability to take that concentrate out away from mine sites and make useful materials out of them. What this deal does is it effectively bridges that gap.”
The combination of whipsawing prices and monopolistic Chinese capacity to process and refine rare earths makes the U.S.’s existing large rare earth reserves less commercially viable.
“In order to compete against that monopoly, the government needed to be fairly heavy handed in structuring a deal that would both get a magnet facility up and running and ensure that that magnet facility stays in operation and weathers the storm of Chinese price manipulation,” Zumwalt-Forbes said.
Beyond simply throwing money around, the federal government can also make long-term commitments that private companies and investors may not be willing or able to make.
“What this Department of Defense deal did is, yes, it provided much-needed cash. But it also gave them strategic certainty around getting that facility off the ground, which is almost more important,” Zumwalt-Forbes said.
“I think this won’t be the last creative critical mineral deal that we see coming out of the Department of Defense,” Zumwalt-Forbes added. They certainly are in pole position here, as opposed to the other agencies and prior administrations.”
On a new plan for an old site, tariffs on Canada, and the Grain Belt Express
Current conditions: Phoenix will “cool” to 108 degrees Fahrenheit today after hitting 118 degrees on Thursday, its hottest day of the year so far • An extreme wildfire warning is in place through the weekend in Scotland • University of Colorado forecasters decreased their outlook for the 2025 hurricane season to 16 named storms, eight hurricanes, and three major hurricanes after a quiet June and July.
President Trump threatened a 35% tariff on Canadian imports on Thursday, giving Prime Minister Mark Carney a deadline of August 1 before the levies would go into effect. The move follows months of on-again, off-again threats against Canada, with former Canadian Prime Minister Justin Trudeau having successfully staved off the tariffs during talks in February. Despite those earlier negotiations, Trump held firm on his 50% tariff on steel and aluminum, which will have significant implications for green manufacturing.
As my colleagues Matthew Zeitlin and Robinson Meyer have written, tariffs on Canadian imports will affect the flow of oil, minerals, and lumber, as well as possibly break automobile supply chains in the United States. It was unclear as of Thursday, however, whether Trump’s tariffs “would affect all Canadian goods, or if he would follow through,” The New York Times reports. The move follows Trump’s announcement this week of tariffs on several other significant trade partners like Japan and South Korea, as well as a 50% tariff on copper.
The long beleaguered Lava Ridge Wind Project, formally halted earlier this year by an executive order from President Trump, might have a second life as the site for small modular reactors, Idaho News 6 reports. Sawtooth Energy Development Corporation has proposed installing six small nuclear power generators on the former Lava Ridge grounds in Jerome County, Idaho, drawn to the site by the power transmission infrastructure that could connect the region to the Midpoint Substation and onto the rest of the Western U.S. The proposed SMR project would be significantly smaller in scale than Lava Ridge, which would have produced 1,000 megawatts of electricity on a 200,000-acre footprint, sitting instead on 40 acres and generating 462 megawatts, enough to power 400,000 homes.
Sawtooth Energy plans to hold four public meetings on the proposal beginning July 21. The Lava Ridge Wind Project had faced strong local opposition — we named it the No. 1 most at-risk project of the energy transition last fall — due in part to concerns about the visibility of the turbines from the Minidoka National Historic Site, the site of a Japanese internment camp.
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Republican Senator Josh Hawley of Missouri said on social media Thursday that Energy Secretary Chris Wright had assured him that he will be “putting a stop to the Grain Belt Express green scam.” The Grain Belt Express is an 804-mile-long, $11 billion planned transmission line that would connect wind farms in Kansas to energy consumers in Missouri, Illinois, and Indiana, which has been nearing construction after “more than a decade of delays,” The New York Times reports. But earlier this month, Missouri Attorney General Andrew Bailey, a Republican, put in a request for the local public service commission to reconsider its approval, claiming that the project had overstated the number of jobs it would create and the cost savings for customers. Hawley has also been a vocal critic of the project and had asked the Energy Department to cancel its conditional loan guarantee for the transmission project.
New electric vehicles sold in Europe are significantly more environmentally friendly than gas cars, even when battery production is taken into consideration, according to a new study by the International Council on Clean Transportation. Per the report, EVs produce 73% less life-cycle greenhouse gas emissions than combustion engine cars, even considering production — a 24% improvement over 2021 estimates. The gains are also owed to the large share of renewable energy sources in Europe, and factor in that “cars sold today typically remain on the road for about 20 years, [and] continued improvement of the electricity mix will only widen the climate benefits of battery electric cars.” The gains are exclusive to battery electric cars, however; “other powertrains, including hybrids and plug-in hybrids, show only marginal or no progress in reducing their climate impacts,” the report found.
Aryna Sabalenka attempts to cool down during her Ladies' Singles semi-final at Wimbledon on Thursday.Julian Finney/Getty Images
With the United Kingdom staring down its third heatwave in a month this week, a new study warns of dire consequences if homes and cities do not adapt to the new climate reality. According to researchers at the University College London and the London School of Hygiene and Tropical Medicine, heat-related deaths in England and Wales could rise 50-fold by the 2070s, jumping from a baseline of 634 deaths to 34,027 in a worst-case scenario of 4.3 degrees Celsius warming, a high-emissions pathway.
The report specifically cited the aging populations of England and Wales, as older people become more vulnerable to the impacts of extreme heat. Low adoption of air conditioning is also a factor: only 2% to 5% of English households use air conditioning, although that number may grow to 32% by 2050. “We can mitigate [the] severity” of the health impacts of heat “by reducing greenhouse gas emissions and with carefully planned adaptations, but we have to start now,” UCL researcher Clare Heaviside told Sky News.
This week, Centerville, Ohio, rolled out high-tech recycling trucks that will use AI to scan the contents of residents’ bins and flag when items have been improperly sorted. “Reducing contamination in our recycling system lowers processing costs and improves the overall efficiency of our collection,” City Manager Wayne Davis said in a statement about the AI pilot program, per the Dayton Daily News.
Or at least the team at Emerald AI is going to try.
Everyone’s worried about the ravenous energy needs of AI data centers, which the International Energy Agency projects will help catalyze nearly 4% growth in global electricity demand this year and next, hitting the U.S. power sector particularly hard. On Monday, the Department of Energy released a report adding fuel to that fire, warning that blackouts in the U.S. could become 100 times more common by 2030 in large part due to data centers for AI.
The report stirred controversy among clean energy advocates, who cast doubt on that topline number and thus the paper’s justification for a significant fossil fuel buildout. But no matter how the AI revolution is powered, there’s widespread agreement that it’s going to require major infrastructure development of some form or another.
Not so fast, says Emerald AI, which emerged from stealth last week with $24.5 million in seed funding led by Radical Ventures along with a slew of other big name backers, including Nvidia’s venture arm as well as former Secretary of State John Kerry, Google’s chief scientist Jeff Dean, and Kleiner Perkins chair John Doerr. The startup, founded and led by Orsted’s former chief strategy and innovation officer Varun Sivaram, was built to turn data centers from “grid liabilities into flexible assets” by slowing, pausing, or redirecting AI workloads during times of peak energy demand.
Research shows this type of data center load flexibility could unleash nearly 100 gigawatts of grid capacity — the equivalent of four or five Project Stargates and enough to power about 83 million U.S. homes for a year. Such adjustments, Sivaram told me, would be necessary for only about 0.5% of a data center’s total operating time, a fragment so tiny that he says it renders any resulting training or operating performance dips for AI models essentially negligible.
As impressive as that hypothetical potential is, whether a software product can actually reduce the pressures facing the grid is a high stakes question. The U.S. urgently needs enough energy to serve that data center growth, both to ensure its economic competitiveness and to keep electricity bills affordable for Americans. If an algorithm could help alleviate even some of the urgency of an unprecedented buildout of power plants and transmission infrastructure, well, that’d be a big deal.
While Emerald AI will by no means negate the need to expand and upgrade our energy system, Sivaram told me, the software alone “materially changes the build out needs to meet massive demand expansion,” he said. “It unleashes energy abundance using our existing system.”
Grand as that sounds, the fundamental idea is nothing new. It’s the same concept as a virtual power plant, which coordinates distributed energy resources such as rooftop solar panels, smart thermostats, and electric vehicles to ramp energy supply either up or down in accordance with the grid’s needs.
Adoption of VPPs has lagged far behind their technical potential, however. That’s due to a whole host of policy, regulatory, and market barriers such as a lack of state and utility-level rules around payment structures, insufficient participation incentives for customers and utilities, and limited access to wholesale electricity markets. These programs also depend on widespread customer opt-in to make a real impact on the grid.
“It’s really hard to aggregate enough Nest thermostats to make any kind of dent,”” Sivaram told me. Data centers are different, he said, simply because “they’re enormous, they’re a small city.” They’re also, by nature, virtually controllable and often already interconnected if they’re owned by the same company. Sivaram thinks the potential of flexible data center loads is so promising and the assets themselves so valuable that governments and utilities will opt to organize “bespoke arrangements for data centers to provide their services.”
Sivaram told me he’s also optimistic that utilities will offer data center operators with flexible loads the option to skip the ever-growing interconnection queue, helping hyperscalers get online and turn a profit more quickly.
The potential to jump the queue is not something that utilities have formally advertised as an option, however, although there appears to be growing interest in the idea. An incentive like this will be core to making Emerald AI’s business case work, transmission advocate and president of Grid Strategies Rob Gramlich told me.
Data center developers are spending billions every year on the semiconductor chips powering their AI models, so the typical demand response value proposition — earn a small sum by turning off appliances when the grid is strained — doesn’t apply here. “There’s just not anywhere near enough money in that for a hyperscaler to say, Oh yeah, I’m gonna not run my Nvidia chips for a while to make $200 a megawatt hour. That’s peanuts compared to the bazillions [they] just spent,” Gramlich explained.
For Emerald AI to make a real dent in energy supply and blunt the need for an immediate and enormous grid buildout, a significant number of data center operators will have to adopt the platform. That’s where the partnership with Nvidia comes in handy, Sivaram told me, as the startup is “working with them on the reference architecture” for future AI data centers. “The goal is for all [data centers] to be potentially flexible in the future because there will be a standard reference design,” Sivaram said.
Whether or not data centers will go all in on Nvidia’s design remains to be seen, of course. Hyperscalers have not typically thought of data centers as a flexible asset. Right now, Gramlich said, most are still in the mindset that they need to be operating all 8,760 hours of the year to reach their performance targets.
“Two or three years ago, when we first noticed the surge in AI-driven demand, I talked to every hyperscaler about how flexible they thought they could be, because it seemed intuitive that machine learning might be more flexible than search and streaming,” Gramlich told me. By and large, the response was that while these companies might be interested in exploring flexibility “potentially, maybe, someday,” they were mostly focused on their mandate to get huge amounts of gigawatts online, with little time to explore new data center models.
“Even the ones that are talking about flexibility now, in terms of what they’re actually doing in the market today, they all are demanding 8,760 [hours of operation per year],” Gramlich told me.
Emerald AI is well aware that its business depends on proving to hyperscalers that a degree of flexibility won’t materially impact their operations. Last week, the startup released the results of a pilot demonstration that it ran at an Oracle data center in Phoenix, which proved it was able to reduce power consumption by 25% for three hours during a period of grid stress while still “assuring acceptable customer performance for AI workloads.”
It achieved this by categorizing specific AI tasks — think everything from model training and fine tuning to conversations with chatbots — from high to low priority, indicating the degree to which operations could be slowed while still meeting Oracle’s performance targets. Now, Emerald AI is planning additional, larger-scale demonstrations to showcase its capacity to handle more complex scenarios, such as responding to unexpected grid emergencies.
As transmission planners and hyperscalers alike wait to see more proof validating Emerald AI’s vision of the future, Sivaram is careful to note that his company is not advocating for a halt to energy system expansion. In an increasingly electrified economy, expanding and upgrading the grid will be essential — even if every data center in the world has a flexible load profile.
’We should be building a nationwide transmission system. We should be building out generation. We should be doing grid modernization with grid enhancing technologies,” Sivaram told me. “We just don’t need to overdo it. We don’t need the particularly massive projections that you’re seeing that are going to cause your grandmother’s electricity rates to spike. We can avoid that.”