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 today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
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
Climate

Trump Sues Over Superfund Statute

On Democrats’ AI blueprint, more nationalized minerals, and the GOP’s anti-geoengineering push

The Department of Justice.
Heatmap Illustration/Getty Images

Current conditions: Tropical Storm Mario is lashing the southwestern U.S. with rainstorms and potential flash flooding • The drought in the Northeast and the Ohio Valley is worsening, with rain deficits in major cities 15% below average • Tropical Cyclone Mirasol is bringing heavy rains to the Philippine island of Luzon.

THE TOP FIVE

1. Justice Department looks to sink Vermont’s climate Superfund

The Trump administration announced a lawsuit Tuesday aimed at tanking Vermont’s Climate Superfund Act, which set up the nation’s first program to force fossil fuel companies to pay for adaptations to deal with the effects of warming temperatures. The Department of Justice said the legislation “will likely” impose “billions of dollars in liability on foreign and domestic energy companies for their alleged past contributions to climate change.” The motion, filed on Monday, comes months after the Justice Department filed an initial complaint in May targeting the law and similar legislation in New York, Hawaii, and Michigan.

Keep reading...Show less
Blue
Politics

What J.P. Morgan’s Chief Climate Advisor Is Telling Energy Startups

Rob talks with Sarah Kapnick about our new era of energy insecurity.

Clean energy.
Heatmap Illustration/Getty Images

We live in a new energy era — one in which the inputs and technologies key to clean electricity production are at the heart of international politics. What will that mean for decarbonization? And how should climate tech companies prepare?

On this week’s episode of Shift Key, Rob chats about those questions and more with Dr. Sarah Kapnick. She is the Global Head of Climate Advisory at J.P. Morgan, where she advises the bank's clients on climate, energy, biodiversity and sustainability topics. She was the former chief scientist at the National Oceanic and Atmospheric Administration from 2022 to 2024, and was previously a research scientist at NOAA’s Geophysical Fluid Dynamics Laboratory in Princeton, New Jersey.

Keep reading...Show less
Green
Energy

Why Mining Is the Dirty Underbelly of the Clean Energy Transition

Thea Riofrancos, a professor of political science at Providence College, discusses her new book, Extraction, and the global consequences of our growing need for lithium.

Lithium mining.
Heatmap Illustration/Getty Images

We cannot hope to halt or even slow dangerous climate change without remaking our energy systems, and we cannot remake our energy systems without environmentally damaging projects like lithium mines.

This is the perplexing paradox at the heart of Extraction: The Frontiers of Green Capitalism, a new book by political scientist and climate activist Thea Riofrancos, coming out September 23, from Norton.

Keep reading...Show less
Yellow