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A new report demonstrates how to power the computing boom with (mostly) clean energy.
After a year of concerted hand-wringing about the growing energy needs of data centers, a report that dropped just before the holidays proposed a solution that had been strangely absent from the discussion.
AI companies have seemingly grasped for every imaginable source of clean energy to quench their thirst for power, including pricey, left-field ideas like restarting shuttered nuclear plants. Some are foregoing climate concerns altogether and ordering up off-grid natural gas turbines. In a pithily named new analysis — “Fast, scalable, clean, and cheap enough” — the report’s authors make a compelling case for an alternative: off-grid solar microgrids.
An off-grid solar microgrid is a system with solar panels, batteries, and small gas generators that can work together to power a data center directly without connecting to the wider electricity system. It can have infinite possible configurations, such as greater or smaller numbers of solar panels, and more or less gas-generated capacity. The report models the full range of possibilities to illustrate the trade-offs in terms of emission reductions and cost.
An eclectic group of experts got together to do the research, including staffers from the payment company Stripe, a developer called Scale Microgrids, and Paces, which builds software to help renewable energy developers identify viable sites for projects. They found that an off-grid microgrid that supplied 44% of a data center’s demand from solar panels and used a natural gas generator the rest of the time would cost roughly $93 per megawatt-hour compared to about $86 for large, off-grid natural gas turbines — and it would emit nearly one million tons of CO2 less than the gas turbines. A cleaner system that produced 90% of its power from solar and batteries would cost closer to $109 per megawatt-hour, the authors found. While that’s more expensive than gas turbines, it’s significantly cheaper than repowering Three Mile Island, the fabled nuclear plant that Microsoft is bringing back online for an estimated $130 per megawatt-hour.
One challenge with solar microgrids is that they require a lot of land for solar panels. But a geospatial analysis showed that there’s more than enough available land in the U.S. southwest — primarily in West Texas — to cover estimated energy demand growth from data centers through 2030. This shouldn’t be taken as a recommendation, per se. The paper doesn’t interrogate the need for data centers or the trade-offs of building renewable power for AI training facilities versus to serve manufacturing or households. The report is just an exercise in asking whether, if these data centers are going to be developed, could they at least add as few emissions as possible? Not all hyperscalers care about climate, and those that do might still prioritize speed and scale over their net-zero commitments. But the authors argue that it’s possible to build these systems more quickly than it would be to install big gas turbines, which currently have at least three-year lead times to procure and fall under more complicated permitting regimes.
Before the New Year, I spoke with two of the authors — Zeke Hausfather from Stripe and Duncan Campbell from Scale Microgrids — about the report. Stripe doesn’t build data centers and has no plans to, but Hausfather works for a unit within the company called Stripe Climate, which has a “remit to work on impactful things,” he told me. He and his colleagues got interested in the climate dilemma of data centers, and enlisted Scale Microgrids and Paces to help investigate. Our conversation has been lightly edited for clarity.
Why weren’t off-grid solar microgrids really being considered before?
Zeke Hausfather: As AI has grown dramatically, there’s been much more demand for data centers specifically focused on training. Those data centers have a lot more relaxed requirements. Instead of serving millions of customer requests in real time, they’re running these incredibly energy intensive training models. Those don’t need to necessarily be located near where people live, and that unlocks a lot more potential for solar, because you need about 50 times more land to build a data center with off-grid solar and storage than you would to build a data center that had a grid connection.
The other change is that we’re simply running out of good grid connections. And so a lot of the conversation among data center developers has been focused on, is there a way to do this with off-grid natural gas? We think that it makes a lot more sense, particularly given the relaxed constraints of where you can build these, to go with solar and storage, gas back-up, and substantially reduce the emissions impact.
Duncan Campbell: It was funny, when Nan [Ransohoff, head of climate at Stripe] and Zeke first reached out to me, I feel like they convinced me that microgrids were a good idea, which was the first time this ever happened in my life. They were like, what do you think about off-grid solar and storage? Oh, the energy density is way off, you need a ton of land. They’re like, yeah, but you know, for training, you could put it out in the desert, it’s fine, and hyperscalers are doing crazy things right now to access this power. We just went through all these things, and by the end of the call, I was like, yeah, we should do this study. I wasn’t thinking about it this way until me, the microgrids guy, spoke to the payments company.
So it’s just kind of against conventional logic?
Campbell: Going off-grid at all is wild for a data center operator to consider, given the historical impulse was, let’s have 3x more backup generators than we need. Even the off-grid gas turbine proposals out there feel a little nuts. Then, to say solar, 1,000 acres of land, a million batteries — it’s just so unconventional, it’s almost heretical. But when you soberly assess the performance criteria and how the landscape has shifted, particularly access to the grid being problematic right now, but also different requirements for AI training and a very high willingness to pay — as we demonstrate in our reference case with the Three Mile Island restart — it makes sense.
Hausfather: We should be clear, when we talk about reliability, a data center with what we model, which is solar, batteries, and 125% capacity backup gas generators, is still probably going to achieve upwards of 99% reliability. It’s just not gonna be the 99.999% that’s traditionally been needed for serving customers with data centers. You can relax some of the requirements around that.
Can you explain how you went about investigating what it would mean for data centers to use off-grid solar microgrids?
Campbell: First we just built a pretty simple power flow model that says, if you’re in a given location, the solar panel is going to make this much power every hour of the year. And if you have a certain amount of demand and a certain amount of battery, the battery is going to charge and discharge these times to make the demand and supply match. And then when it can’t, your generators will kick on. So that model is just for a given solar-battery-generator combo in a given location. Then what we did is made a huge scenario suite in 50-megawatt increments. Now you can see, for any level of renewable-ness you want, here’s what the [levelized cost of energy] is.
Hausfather: As you approach 100%, the costs start increasing exponentially, which isn’t a new finding, but you’re essentially having to overbuild more and more solar and batteries in order to deal with those few hours of the year where you have extended periods of cloudiness. Which is why it makes a lot more sense, financially, to have a system with some gas generator use — unless you happen to be in a situation where you can actually only run your data center 90% of the time. I think that’s probably a little too heretical for anyone today, but we did include that as one of the cases.
Did you consider water use? Because when you zoom in on the Southwest, that seems like it could be a constraint.
Hausfather: We talked about water use a little bit, but it wasn’t a primary consideration. One of the reasons is that how data centers are designed has a big effect on net water use. There are a lot of designs now that are pretty low — close to zero — water use, because you’re cycling water through the system rather than using evaporative cooling as the primary approach.
What do you want the takeaway from this report to be? Should all data centers be doing this? To what extent do you think this can replace other options out there?
Hausfather: There is a land rush right now for building data centers quickly. While there’s a lot of exciting investment happening in clean, firm generation like the enhanced geothermal that Fervo is doing, none of those are going to be available at very large scales until after 2030. So if you’re building data centers right now and you don’t want to cause a ton of emissions and threaten your company’s net-zero targets or the social license for AI more broadly, this makes a lot of sense as an option. The cost premium above building a gas system is not that big.
Campbell: For me, it’s two things. I see one purpose of this white paper being to reset rules of thumb. There’s this vestigial knowledge we have that this is impossible, and no, this is totally possible. And it seems actually pretty reasonable.
The second part that I think is really radical is the gigantic scale implied by this solution. Every other solution being proposed is kind of like finding a needle in a haystack — if we find this old steel mill, we could use that interconnection to build a data center, or, you know, maybe we can get Exxon to make carbon capture work finally. If a hyperscaler just wanted to build 10 gigawatts of data centers, and wanted one plan to do it, I think this is the most compelling option. The scalability implied by this solution is a huge factor that should be considered.
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Any household savings will barely make a dent in the added costs from Trump’s many tariffs.
Donald Trump’s tariffs — the “fentanyl” levies on Canada, China, and Mexico, the “reciprocal” tariffs on nearly every country (and some uninhabited islands), and the global 10% tariff — will almost certainly cause consumer goods on average to get more expensive. The Yale Budget Lab estimates that in combination, the tariffs Trump has announced so far in his second term will cause prices to rise 2.3%, reducing purchasing power by $3,800 per year per household.
But there’s one very important consumer good that seems due to decline in price.
Trump administration officials — including the president himself — have touted cheaper oil to suggest that the economic response to the tariffs hasn’t been all bad. On Sunday, Secretary of the Treasury Scott Bessent told NBC, “Oil prices went down almost 15% in two days, which impacts working Americans much more than the stock market does.”
Trump picked up this line on Truth Social Monday morning. “Oil prices are down, interest rates are down (the slow moving Fed should cut rates!), food prices are down, there is NO INFLATION,” he wrote. He then spent the day posting quotes from Fox Business commentators echoing that idea, first Maria Bartiromo (“Rates are plummeting, oil prices are plummeting, deregulation is happening. President Trump is not going to bend”) then Charles Payne (“What we’re not talking about is, oil was $76, now it’s $65. Gasoline prices are going to plummet”).
But according to Neil Dutta, head of economic research at Renaissance Macro Research, pointing to falling oil prices as a stimulus is just another example of the “4D chess” theory, under which some market participants attribute motives to Trump’s trade policy beyond his stated goal of reducing trade deficits to as near zero (or surplus!) as possible.
Instead, oil markets are primarily “responding to the recession risk that comes from the tariff and the trade war,” Dutta told me. “That is the main story.” In short, oil markets see less global trade and less global production, and therefore falling demand for oil. The effect on household consumption, he said, was a “second order effect.”
It is true that falling oil prices will help “stabilize consumption,” Dutta told me (although they could also devastate America’s own oil industry). “It helps. It’ll provide some lift to real income growth for consumers, because they’re not spending as much on gasoline.” But “to fully offset the trade war effects, you basically need to get oil down to zero.”
That’s confirmed by some simple and extremely back of the envelope math. In 2023, households on average consumed about 700 gallons of gasoline per year, based on Energy Information Administration calculations that the average gasoline price in 2023 was $3.52, while the Bureau of Labor Statistics put average household gasoline expenditures at about $2,450.
Let’s generously assume that due to the tariffs and Trump’s regulatory and diplomatic efforts, gas prices drop from the $3.26 they were at on Monday, according to AAA, to $2.60, the average price in 2019. (GasBuddy petroleum analyst Patrick De Haanwrote Monday that the tariffs combined with OPEC+ production hikes could lead gas prices “to fall below $3 per gallon.”)
Let’s also assume that this drop in gas prices does not cause people to drive more or buy less fuel-efficient vehicles. In that case, those same 700 gallons cost the average American $1,820, which would generate annual savings of $630 on average per household. If we went to the lowest price since the Russian invasion of Ukraine, about $3 per gallon, total consumption of 700 gallons would cost a household about $2,100, saving $350 per household per year.
That being said, $1,820 is a pretty low level for annual gasoline consumption. In 2021, as the economy was recovering from the Covid recession and before gas prices popped, annual gasoline expenditures only got as low as $1,948; in 2020 — when oil prices dropped to literally negative dollars per barrel and gas prices got down to $1.85 a gallon — annual expenditures were just over $1,500.
In any case, if you remember the opening paragraphs of this story, even the most generous estimated savings would go nowhere near surmounting the overall rise in prices forecast by the Yale Budget Lab. $630 is less than $3,800! (JPMorgan has forecast a more mild increase in prices of 1% to 1.5%, but agrees that prices will likely rise and purchasing power will decline.)
But maybe look at it this way: You might be able to drive a little more than you expected to, even as your costs elsewhere are going up. Just please be careful! You don’t want to get into a bad accident and have to replace your car: New car prices are expected to rise by several thousand dollars due to Trump’s tariffs.
With cars about to get more expensive, it might be time to start tinkering.
More than a decade ago, when I was a young editor at Popular Mechanics, we got a Nissan Leaf. It was a big deal. The magazine had always kept long-term test cars to give readers a full report of how they drove over weeks and months. A true test of the first true production electric vehicle from a major car company felt like a watershed moment: The future was finally beginning. They even installed a destination charger in the basement of the Hearst Corporation’s Manhattan skyscraper.
That Leaf was a bit of a lump, aesthetically and mechanically. It looked like a potato, got about 100 miles of range, and delivered only 110 horsepower or so via its electric motors. This made the O.G. Leaf a scapegoat for Top Gear-style car enthusiasts eager to slander EVs as low-testosterone automobiles of the meek, forced upon an unwilling population of drivers. Once the rise of Tesla in the 2010s had smashed that paradigm and led lots of people to see electric vehicles as sexy and powerful, the original Leaf faded from the public imagination, a relic of the earliest days of the new EV revolution.
Yet lots of those cars are still around. I see a few prowling my workplace parking garage or roaming the streets of Los Angeles. With the faded performance of their old batteries, these long-running EVs aren’t good for much but short-distance city driving. Ignore the outdated battery pack for a second, though, and what surrounds that unit is a perfectly serviceable EV.
That’s exactly what a new brand of EV restorers see. Last week, car site The Autopiancovered DIYers who are scooping up cheap old Leafs, some costing as little as $3,000, and swapping in affordable Chinese-made 62 kilowatt-hour battery units in place of the original 24 kilowatt-hour units to instantly boost the car’s range to about 250 miles. One restorer bought a new battery on the Chinese site Alibaba for $6,000 ($4,500, plus $1,500 to ship that beast across the sea).
The possibility of the (relatively) simple battery swap is a longtime EV owner’s daydream. In the earlier days of the electrification race, many manufacturers and drivers saw simple and quick battery exchange as the solution for EV road-tripping. Instead of waiting half an hour for a battery to recharge, you’d swap your depleted unit for a fully charged one and be on your way. Even Tesla tested this approach last decade before settling for good on the Supercharger network of fast-charging stations.
There are still companies experimenting with battery swaps, but this technology lost. Other EV startups and legacy car companies that followed Nissan and Tesla into making production EVs embraced the rechargeable lithium-ion battery that is meant to be refilled at a fast-charging station and is not designed to be easily removed from the vehicle. Buy an electric vehicle and you’re buying a big battery with a long warranty but no clear plan for replacement. The companies imagine their EVs as something like a smartphone: It’s far from impossible to replace the battery and give the car a new life, but most people won’t bother and will simply move on to a new car when they can’t take the limitations of their old one anymore.
I think about this impasse a lot. My 2019 Tesla Model 3 began its life with a nominal 240 miles of range. Now that the vehicle has nearly six years and 70,000 miles on it, its maximum range is down to just 200, while its functional range at highway speed is much less than that. I don’t want to sink money into another vehicle, which means living with an EV’s range that diminishes as the years go by.
But what if, one day, I replaced its battery? Even if it costs thousands of dollars to achieve, a big range boost via a new battery would make an older EV feel new again, and at a cost that’s still far less than financing a whole new car. The thought is even more compelling in the age of Trump-imposed tariffs that will raise already-expensive new vehicles to a place that’s simply out of reach for many people (though new battery units will be heavily tariffed, too).
This is no simple weekend task. Car enthusiasts have been swapping parts and modifying gas-burning vehicles since the dawn of the automotive age, but modern EVs aren’t exactly made with the garage mechanic in mind. Because so few EVs are on the road, there is a dearth of qualified mechanics and not a huge population of people with the savvy to conduct major surgery on an electric car without electrocuting themselves. A battery-replacing owner would need to acquire not only the correct pack but also potentially adapters and other equipment necessary to make the new battery play nice with the older car. Some Nissan Leaf modifiers are finding their replacement packs aren’t exactly the same size, shape or weight, The Autopian says, meaning they need things like spacers to make the battery sit in just the right place.
A new battery isn’t a fix-all either. The motors and other electrical components wear down and will need to be replaced eventually, too. A man in Norway who drove his Tesla more than a million miles has replaced at least four battery packs and 14 motors, turning his EV into a sort of car of Theseus.
Crucially, though, EVs are much simpler, mechanically, than combustion-powered cars, what with the latter’s belts and spark plugs and thousands of moving parts. The car that surrounds a depleted battery pack might be in perfectly good shape to keep on running for thousands of miles to come if the owner were to install a new unit, one that could potentially give the EV more driving range than it had when it was new.
The battery swap is still the domain of serious top-tier DIYers, and not for the mildly interested or faint of heart. But it is a sign of things to come. A market for very affordable used Teslas is booming as owners ditch their cars at any cost to distance themselves from Elon Musk. Old Leafs, Chevy Bolts and other EVs from the 2010s can be had for cheap. The generation of early vehicles that came with an unacceptably low 100 to 150 miles of range would look a lot more enticing if you imagine today’s battery packs swapped into them. The possibility of a like-new old EV will look more and more promising, especially as millions of Americans realize they can no longer afford a new car.
On the shifting energy mix, tariff impacts, and carbon capture
Current conditions: Europe just experienced its warmest March since record-keeping began 47 years ago • It’s 105 degrees Fahrenheit in India’s capital Delhi where heat warnings are in effect • The risk of severe flooding remains high across much of the Mississippi and Ohio Valleys.
The severe weather outbreak that has brought tornadoes, extreme rainfall, hail, and flash flooding to states across the central U.S. over the past week has already caused between $80 billion and $90 billion in damages and economic losses, according to a preliminary estimate from AccuWeather. The true toll is likely to be costlier because some areas have yet to report their damages, and the flooding is ongoing. “A rare atmospheric river continually resupplying a firehose of deep tropical moisture into the central U.S., combined with a series of storms traversing the same area in rapid succession, created a ‘perfect storm’ for catastrophic flooding and devastating tornadoes,” said AccuWeather’s chief meteorologist Jonathan Porter. The estimate takes into account damages to buildings and infrastructure, as well as secondary effects like supply chain and shipping disruptions, extended power outages, and travel delays. So far 23 people are known to have died in the storms. “This is the third preliminary estimate for total damage and economic loss that AccuWeather experts have issued so far this year,” the outlet noted in a release, “outpacing the frequency of major, costly weather disasters since AccuWeather began issuing estimates in 2017.”
AccuWeather
Low-emission energy sources accounted for 41% of global electricity generation in 2024, up from 39.4% in 2023, according to energy think tank Ember’s annual Global Electricity Review. That includes renewables as well as nuclear. If nuclear is left out of the equation, renewables alone made up 32% of power generation last year. Overall, renewables added a record 858 terawatt hours, nearly 50% more than the previous record set in 2022. Hydro was the largest source of low-carbon power, followed by nuclear. But wind and solar combined overtook hydro last year, while nuclear’s share of the energy mix reached a 45-year low. More solar capacity was installed in 2024 than in any other single year.
Ember
The report notes that demand for electricity rose thanks to heat waves and air conditioning use. This resulted in a slight, 1.4% annual increase in fossil-fuel power generation and pushed power-sector emissions to a new all-time high of 14.5 billion metric tons. “Clean electricity generation met 96% of the demand growth not caused by hotter temperatures,” the report said.
President Trump’s new tariffs will have a “limited” effect on the amount of solar components the U.S. imports from Asia because the U.S. already imposes tariffs on these products, according to a report from research firm BMI. That said, the U.S. still relies heavily on imported solar cells, and the new fees are likely to raise costs for domestic manufacturers and developers, which will ultimately be passed on to buyers and could slow solar growth. “Since the U.S.’s manufacturing capacity is insufficient to meet demand for solar, wind, and grid components, we do expect that costs will increase for developers due to the tariffs which will now be imposed upon these components,” BMI wrote.
In other tariff news, the British government is adjusting its 2030 target of ending the sale of new internal combustion engine cars to ease some of the pain from President Trump’s new 25% auto tariffs. Under the U.K.’s new EV mandate, carmakers will be able to sell new hybrids through 2035 (whereas the previous version of the rules banned them by 2030), and gas and diesel vans can also be sold through 2035. The changes also carve out exemptions for luxury supercar brands like McLaren and Aston Martin, which will be allowed to keep selling new ICE vehicles beyond 2030 because, the government says, they produce so few. The goal is to “help ease the transition and give industry more time to prepare.” British Transport Secretary Heidi Alexander insisted the changes have been “carefully calibrated” and their impact on carbon emissions is “negligible.” As The New York Timesnoted, the U.S. is the largest single-country export market for British cars.
The Environmental Protection Agency has approved Occidental Petroleum’s application to capture and sequester carbon dioxide at its direct air capture facility in Texas, and issued permits that will allow the company to drill and inject the gas more than one mile underground. The Stratos DAC plant is being developed by Occidental subsidiary 1PointFive. As Heatmap’s Katie Brigham has reported, Stratos is designed to remove up to 500,000 metric tons of CO2 annually and set to come online later this year. Its success (or failure) could shape the future of DAC investment at a time when the Trump administration is hollowing out the Department of Energy’s nascent Carbon Dioxide Removal team and casting doubt over the future of the DOE’s $3.5 billion Regional Direct Air Capture Hubs program. While Stratos is not a part of the hubs program, it will use the same technology as Occidental’s South Texas DAC hub.
The Bezos Earth Fund and the Global Methane Hub are launching a $27 million effort to fund research into selectively breeding cattle that emit less methane.