Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Podcast

What’s Really Holding Back New Data Centers

Rob and Jesse talk with a former Meta energy executive, Near Horizon Group’s Peter Freed.

Data center construction.
Heatmap Illustration/Getty Images

If you care about decarbonizing the power grid anytime soon, you have to care about data centers. The AI boom and the ongoing growth of the internet have driven a big new cycle of data center construction in the United States, with tech companies trying to buy electricity on the scale of large cities’ energy demands.

Peter Freed has seen this up close. As Meta’s former director of energy strategy, he worked on clean energy procurement and data center development from 2014 to 2024. He is now a founding partner at the Near Horizon Group, where he advises investors and companies on emerging topics in data centers and advanced clean energy.

On this week’s episode of Shift Key, Rob and Jesse talk with Peter about whether AI and new data centers are going to blow up the grid and break decarbonization. What are the real-world constraints on developing a data center in 2025? Are tech companies beginning to run out of natural gas to burn? What do their investments in clean energy mean? And could the rise of AI prompt an accidental return to coal? Shift Key is hosted by Jesse Jenkins, a professor of energy systems engineering at Princeton University, and Robinson Meyer, Heatmap’s executive editor.

Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.

You can also add the show’s RSS feed to your podcast app to follow us directly.

Here is an excerpt from our conversation:

Robinson Meyer: Even now, most of the data centers getting built are not AI data centers, right? The AI signal has yet to fully set in. Is that right?

Peter Freed: That’s right. What I would say is, if you look back at what happened, what got announced in 2024, most of the data centers that broke ground and were announced in 2024 were part of a demand plan that was done in 2023, when we did not have the AI demand ratchet, as I call it, on the system.

Now, what people then did is they probably just pulled stuff in. So you know, maybe you were going to do four data centers in 2024 and a few more in 2025. And instead they just, they yanked it forward. So it is also true that we’re definitely seeing the beginnings of this. But this year, 2025, will be a real bellwether year in terms of what the likely overall picture looks like. And one of the proxies that you can use for that is the capex forecast of the hyperscalers. So Meta’s capex forecast in 2024 was $38 billion; 2025, their capex forecast is $65 billion. So that’s a huge jump.

And by the way, Meta in particular doesn’t have a cloud business, so they’re not dependent on the signals coming in from other people. This is just for their own. So in some ways, it’s a clearer picture than we get from some of the other companies. Both Microsoft and Google are up at $80 billion. So to me this says, okay, 2025 is kind of going to show us where this trajectory is likely to go. And it’s pretty high.

I see the same reports that you all see. We’re probably somewhere between 30 [gigawatts] and 100 gigawatts of incremental data center-related load by 2030. I’d take the over at 50 gigawatts. It might be a little bit less, it might be more — 100 [gigawatts], I don’t know. So that’s a big signal.

Jesse Jenkins: For context, 50 gigawatts is half of the U.S. nuclear power fleet.

Freed: That’s correct. Yeah.

Jenkins: Maybe like 10% of U.S. electricity.

Freed: Yeah. Yeah. And so it lines up pretty well with what we were just talking about in terms of those forecasts. At the same time, if you look at all of the load growth projections that utilities with major data center demand have in their jurisdictions, you also get a number which is way larger than 50 gigawatts.

What is the reason for this gratuitous speculative behavior, the likes of which the industry has never seen? And we can talk as much or as little about that as you want, but it is simultaneously true that I think this is going to be a really large demand driver and that we have bubble-like characteristics in terms of the amount of stuff that people are trying to get done.

Music for Shift Key is by Adam Kromelow.

Blue

You’re out of free articles.

Subscribe to access Heatmap’s expert analysis of climate change, clean energy, and sustainability. Save $57 on an annual subscription, just $156 $99/year.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
AM Briefing

EU Backs DAC

On British oil, Claude’s friend request, and Russian nuclear

Carbon removal.
Heatmap Illustration/Climeworks

Current conditions: Tropical Depression Two is set to strengthen into Tropical Storm Bertha as the system widens over the Gulf Coast from Texas to Tampa Bay, Florida • Temperatures will top 112 degrees Fahrenheit in Khartoum, the capital of war-ravaged Sudan • Canadian wildfire smoke may have largely cleared in the Northeastern United States, but nearly 900 blazes are still burning, and Chicago is still under an air quality warning.

THE TOP FIVE

1. Britain’s incoming prime minister sticks to a controversial ban on oil and gas exploration

Feel the Burnham. Carl Court/Getty Images

Keep reading...Show less
Yellow
Daily Briefing

What Worries Me Most About This Wildfire Smoke

We didn’t know days like this could happen. Then we learned how bad they really are.

Wildfire smoke.
Heatmap Illustration/NOAA

When I woke up this morning in Chicago, the Air Quality Index was in the 300s, and I could barely see the top of the skyscraper across the street. The weather app on my phone featured a little image of a man wearing a World War I-style full-face gas mask. That’s fun, I thought. I didn’t know it could do that.

I went downstairs. Old photographs of the city were hanging in the hotel lobby — girls playing in bathing suits next to the lake — and I realized that the haze shrouding the old Lakeshore Drive condos was in fact haze, smoke, particulate matter, and not a lens artifact. It really used to be that smoky all the time, back before the Clean Air Act. Then I glanced up and saw that the haze out the window was far worse than the century-old pollution in the picture.

Keep reading...Show less
Blue
Sparks

Microsoft Sustainability Chief Hounded by Protestors at Seattle Climate Week

“Microsoft, you can’t hide, we can see your dirty side!”

Melanie Nakagawa.
Heatmap Illustration/Getty Images, Katie Brigham

Protestors interrupted one of the final sessions of PNW Climate Week — a conference that brings together climate leaders across Washington, Oregon, and British Columbia — objecting to Microsoft’s rising carbon emissions from data centers and partnerships with oil and gas companies. The company’s Chief Sustainability Officer Melanie Nakagawa was having a one on one conversation with GeekWire climate reporter Lisa Stiffler at Seattle’s City Hall when protestors carrying signs reading “Microsoft’s AI pollutes” and other slogans began shouting from the audience.

I was there, having just moderated the prior panel on how to finance Washington’s clean energy ambitions. Early on there were some rumblings in the crowd from up front. “Climate leaders don’t build gas pipelines in Moses Lake,” was the first objection I heard clearly. It came shortly after Nakagawa kicked off the conversation by highlighting Microsoft’s partnership with sustainable aviation fuel startup Twelve, which recently opened its first commercial-scale SAF plant in Moses Lake, Washington. The tech giant has supported the project through a strategic investment from its Climate Innovation Fund, as well as an offtake agreement for the fuel that will help offset its emissions from employee travel.

Keep reading...Show less