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Q&A

Data Centers, Meet Stranded Solar

Chatting with Next10’s Noel Perry and Stephanie Leonard about a novel renewable energy play.

The Q&A subjects.
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This week’s Q&A is a two-fer, featuring Noel Perry and Stephanie Leonard from the California environmental nonprofit Next10. They released a report this week in partnership with researchers at the University of Pennsylvania pitching an idea I find fascinating: Data center developers could save money and time if they just built their projects close to existing renewable energy projects that are curtailed from putting power onto the grid because of bottlenecks and capacity issues. I reached out to Next10 to chat about the proposal and how it could inform discussion not just in California, but also in other states.

The following conversation has been lightly edited for clarity.

In terms of best practices, help us understand what you’re getting at with the report.

Stephanie Leonard: Another project we do is the California Green Energy Index, and we track the state’s emissions, renewable energy deployment, and other things. One of the things we track is curtailment, which continues to rise every single year.

Curtailment is an ongoing problem for California. It’s great we’re adding so much solar to the grid, but we’re ending up with these stranded assets. A lot of the solar farms are in the southern part of the state — there’s the Path 15 corridor, which connects the southern California grid to the northern part of the state and is at overcapacity. So we wanted to look at ways to take advantage of this without expensive transmission buildout. Is there a way we can move the energy use to where the curtailment is happening, rather than build wires to energy use?

Noel Perry: Go back to November 2024, we sponsored a conference at Santa Clara University here in the Bay Area focused on the environmental impacts of data centers. Back then it actually felt early. I mean, the proliferation of data centers has taken over the world. Two years ago, this wasn’t as much of a thing. And there were three researchers there, one of whom – Ben Lee from the University of Pennsylvania – wound up making this report we’re publishing now. He came up with this idea of how excess energy capacity could be used for data centers, which sounded interesting.

How is transmission a bottleneck here, specifically?

Leonard: We do know by 2039 that Path 15 is expected to be congested for 84% of the year. That’s even with planned upgrades from [California’s grid operator]. It’s going to continue to get more and more congested, [and] we’re going to continue to have more of these stranded assets. It’s more of this cheap solar that can’t get to the population centers.

We can site data centers in congested areas — that would be a good outcome. And a lot of these projects are set to be powered by fossil fuels; I’ve seen reports that about 75% of all planned natural gas build-out across the U.S. is for data centers, specifically. Not only would this be taking advantage of offloading curtailed energy, but this would ensure new data centers are using renewable energy. The report also recommends battery storage so they can store the renewable energy, too.

Is this different from the “bring-your-own-energy” approach to data centers and energy?

Leonard: I would consider this more of a bridge solution. The report doesn’t evaluate the bring-your-own-energy model, but this is the kind of thing that can be done more quickly. The resources are already there. The infrastructure is already there.

When it comes to turning these recommendations into policy, what’s the mood in California like? Do they want to take up solutions like these?

Perry: There’s definitely interest. We would hope that this idea of putting data centers near energy that is curtailed, near where congestion is, that we hope would be looked at not only in California but other states. This idea could be a model in some fashion.

As you know, we have a lot of renewable energy – more than maybe a lot of states. So in a way, California is a better place for data centers than other places if you want them to be powered by renewable energy. That doesn’t mean all Californians want data centers to come here, but that’s an important point to make.

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Spotlight

The Real vs. Imagined Problems with Data Centers’ Water Use

How much water is too much?

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The data center water issues are real – but they aren’t what you think.

Too often, I hear people say the number one reason they’re against data center development is water use. Heatmap’s data shows water consumption is historically the reason cited most often by activists when opposing projects. This complaint, they often say, is rooted in the fear that this nascent buildout of AI infrastructure will simply draw so much H2O it will leave little liquid left for the rest of us.

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Hotspots

Texas Is the Eye of the Bipartisan Data Center Hurricane

And more of this week’s biggest news around project fights.

The United States.
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1. Matagorda County, Texas – The bipartisan data center backlash is now so powerful that a top Republican Texas state official is doing an event with the Democrat vying to replace him.

  • On Thursday afternoon, outgoing Republican agriculture commissioner Sid Miller and Democratic candidate Clayton Tucker are marqueeing a forum hosted by Matagorda County Against Data Centers, an opposition group that appears to also monitor solar and battery storage for potential opposition, too. Miller is leaving his post at the end of the year after being defeated in a GOP primary by Nate Sheets, who was supported by Gov. Greg Abbott.
  • This bipartisan forum will take place after Abbott himself called for new laws and regulations on data centers in a letter to Texas Public Utility Commission Chair Thomas Gleeson and ERCOT CEO Pablo Vegas. Abbott said he’d push to require data centers to pay costs for electric infrastructure and use “water-efficient technologies such as closed-loop cooling systems.” Also on the to-do list? Mandatory property setbacks and noise reduction.
  • It’s becoming clear the frustrations against AI infrastructure and associated energy projects are starting to boil without a vent. The first county to issue a data center moratorium in Texas has withdrawn the effort after facing a $100 million lawsuit from a developer, and other counties are delaying future moratoria on fears of legal risks. Where will all of this frustration go without the option to pause development locally?
  • We’re starting to see Texas legislators seek to channel this anger. Last week, Rep. Veronica Escobar – a Democrat who represents the dry, data center-anxious city of El Paso – offered an amendment in a House committee to block funding for the EPA’s new data center construction rules. The amendment failed but I’d hardly be surprised to see this sort of rider gain traction if Democrats retake the lower chamber, especially if data centers are a major election issue.

2. Albany County, New York – As we await Gov. Kathy Hochul’s decision on whether to enact the nation’s first statewide moratorium on data centers, I wanted to bring up some pretty crucial facts about the situation in the Empire State.

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Q&A

One Investor’s Climate ‘Realism’ In the Data Center Era

A conversation with Craig Lawrence of Energy Transition Ventures

The Q&A subject.
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This week’s conversation is one of my favorites so far – Craig Lawrence of Energy Transition Ventures. Lawrence has been around the block and back again when it comes to the cleantech investment landscape. So I took note when he got into a brief back-and-forth with an activist fighting data centers in Indiana who claimed there were “so many clean energy people who no longer care about climate change” because they “now support fossil fuel data centers if some nominal amount is met with clean energy.”

Lawrence replied, “Some of us are simply realists.”

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