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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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Defenders of the Inflation Reduction Act have hit on what they hope will be a persuasive argument for why it should stay.
With the fate of the Inflation Reduction Act and its tax credits for building and producing clean energy hanging in the balance, the law’s supporters have increasingly turned to dollars-and-cents arguments in favor of its preservation. Since the election, industry and research groups have put out a handful of reports making the broad argument that in addition to higher greenhouse gas emissions, taking away these tax credits would mean higher electricity bills.
The American Clean Power Association put out a report in December, authored by the consulting firm ICF, arguing that “energy tax credits will drive $1.9 trillion in growth, creating 13.7 million jobs and delivering 4x return on investment.”
The Solar Energy Industries Association followed that up last month with a letter citing an analysis by Aurora Energy Research, which found that undoing the tax credits for wind, solar, and storage would reduce clean energy deployment by 237 gigawatts through 2040 and cost nearly 100,000 jobs, all while raising bills by hundreds of dollars in Texas and New York. (Other groups, including the conservative environmental group ConservAmerica and the Clean Energy Buyers Association have commissioned similar research and come up with similar results.)
And just this week, Energy Innovation, a clean energy research group that had previously published widely cited research arguing that clean energy deployment was not linked to the run-up in retail electricity prices, published a report that found repealing the Inflation Reduction Act would “increase cumulative household energy costs by $32 billion” over the next decade, among other economic impacts.
The tax credits “make clean energy even more economic than it already is, particularly for developers,” explained Energy Innovation senior director Robbie Orvis. “When you add more of those technologies, you bring down the electricity cost significantly,” he said.
Historically, the price of fossil fuels like natural gas and coal have set the wholesale price for electricity. With renewables, however, the operating costs associated with procuring those fuels go away. The fewer of those you have, “the lower the price drops,” Orvis said. Without the tax credits to support the growth and deployment of renewables, the analysis found that annual energy costs per U.S. household would go up some $48 annually by 2030, and $68 by 2035.
These arguments come at a time when retail electricity prices in much of the country have grown substantially. Since December 2019, average retail electricity prices have risen from about $0.13 per kilowatt-hour to almost $0.18, according to the Bureau of Labor Statistics. In Massachusetts and California, rates are over $0.30 a kilowatt-hour, according to the Energy Information Administration. As Energy Innovation researchers have pointed out, states with higher renewable penetration sometimes have higher rates, including California, but often do not, as in South Dakota, where 77% of its electricity comes from renewables.
Retail electricity prices are not solely determined by fuel costs Distribution costs for maintaining the whole electrical system are also a factor. In California, for example,it’s these costs that have driven a spike in rates, as utilities have had to harden their grids against wildfires. Across the whole country, utilities have had to ramp up capital investment in grid equipment as it’s aged, driving up distribution costs, a 2024 Energy Innovation report argued.
A similar analysis by Aurora Energy Research (the one cited by SEIA) that just looked at investment and production tax credits for wind, solar, and batteries found that if they were removed, electricity bills would increase hundreds of dollars per year on average, and by as much as $40 per month in New York and $29 per month in Texas.
One reason the bill impact could be so high, Aurora’s Martin Anderson told me, is that states with aggressive goals for decarbonizing the electricity sector would still have to procure clean energy in a world where its deployment would have gotten more expensive. New York is targetinga target for getting 70% of its electricity from renewable sources by 2030, while Minnesota has a goal for its utilities to sell 55% clean electricity by 2035 and could see its average cost increase by $22 a month. Some of these states may have to resort to purchasing renewable energy certificates to make up the difference as new generation projects in the state become less attractive.
Bills in Texas, on the other hand, would likely go up because wind and solar investment would slow down, meaning that Texans’ large-scale energy consumption would be increasingly met with fossil fuels (Texas has a Renewable Portfolio Standard that it has long since surpassed).
This emphasis from industry and advocacy groups on the dollars and cents of clean energy policy is hardly new — when the House of Representatives passed the (doomed) Waxman-Markey cap and trade bill in 2009, then-Speaker of the House Nancy Pelosi told the House, “Remember these four words for what this legislation means: jobs, jobs, jobs, and jobs.”
More recently, when Democratic Senators Martin Heinrich and Tim Kaine hosted a press conference to press their case for preserving the Inflation Reduction Act, the email that landed in reporters’ inboxes read “Heinrich, Kaine Host Press Conference on Trump’s War on Affordable, American-Made Energy.”
“Trump’s war on the Inflation Reduction Act will kill American jobs, raise costs on families, weaken our economic competitiveness, and erode American global energy dominance,” Heinrich told me in an emailed statement. “Trump should end his destructive crusade on affordable energy and start putting the interests of working people first.”
That the impacts and benefits of the IRA are spread between blue and red states speaks to the political calculation of clean energy proponents, hoping that a bill that subsidized solar panels in Texas, battery factories in Georgia, and battery storage in Southern California could bring about a bipartisan alliance to keep it alive. While Congressional Republicans will be scouring the budget for every last dollar to help fund an extension of the 2017 Tax Cuts and Jobs Act, a group of House Republicans have gone on the record in defense of the IRA’s tax credits.
“There's been so much research on the emissions impact of the IRA over the past few years, but there's been comparatively less research on the economic benefits and the household energy benefits,” Orvis said. “And I think that one thing that's become evident in the last year or so is that household energy costs — inflation, fossil fuel prices — those do seem to be more top of mind for Americans.”
Opinion modeling from Heatmap Pro shows that lower utility bills is the number one perceived benefit of renewables in much of the country. The only counties where it isn’t the number one perceived benefit are known for being extremely wealthy, extremely crunchy, or both: Boulder and Denver in Colorado; Multnomah (a.k.a. Portland) in Oregon; Arlington in Virginia; and Chittenden in Vermont.
On environmental justice grants, melting glaciers, and Amazon’s carbon credits
Current conditions: Severe thunderstorms are expected across the Mississippi Valley this weekend • Storm Martinho pushed Portugal’s wind power generation to “historic maximums” • It’s 62 degrees Fahrenheit, cloudy, and very quiet at Heathrow Airport outside London, where a large fire at an electricity substation forced the international travel hub to close.
President Trump invoked emergency powers Thursday to expand production of critical minerals and reduce the nation’s reliance on other countries. The executive order relies on the Defense Production Act, which “grants the president powers to ensure the nation’s defense by expanding and expediting the supply of materials and services from the domestic industrial base.”
Former President Biden invoked the act several times during his term, once to accelerate domestic clean energy production, and another time to boost mining and critical minerals for the nation’s large-capacity battery supply chain. Trump’s order calls for identifying “priority projects” for which permits can be expedited, and directs the Department of the Interior to prioritize mineral production and mining as the “primary land uses” of federal lands that are known to contain minerals.
Critical minerals are used in all kinds of clean tech, including solar panels, EV batteries, and wind turbines. Trump’s executive order doesn’t mention these technologies, but says “transportation, infrastructure, defense capabilities, and the next generation of technology rely upon a secure, predictable, and affordable supply of minerals.”
Anonymous current and former staffers at the Environmental Protection Agency have penned an open letter to the American people, slamming the Trump administration’s attacks on climate grants awarded to nonprofits under the Inflation Reduction Act’s Greenhouse Gas Reduction Fund. The letter, published in Environmental Health News, focuses mostly on the grants that were supposed to go toward environmental justice programs, but have since been frozen under the current administration. For example, Climate United was awarded nearly $7 billion to finance clean energy projects in rural, Tribal, and low-income communities.
“It is a waste of taxpayer dollars for the U.S. government to cancel its agreements with grantees and contractors,” the letter states. “It is fraud for the U.S. government to delay payments for services already received. And it is an abuse of power for the Trump administration to block the IRA laws that were mandated by Congress.”
The lives of 2 billion people, or about a quarter of the human population, are threatened by melting glaciers due to climate change. That’s according to UNESCO’s new World Water Development Report, released to correspond with the UN’s first World Day for Glaciers. “As the world warms, glaciers are melting faster than ever, making the water cycle more unpredictable and extreme,” the report says. “And because of glacial retreat, floods, droughts, landslides, and sea-level rise are intensifying, with devastating consequences for people and nature.” Some key stats about the state of the world’s glaciers:
In case you missed it: Amazon has started selling “high-integrity science-based carbon credits” to its suppliers and business customers, as well as companies that have committed to being net-zero by 2040 in line with Amazon’s Climate Pledge, to help them offset their greenhouse gas emissions.
“The voluntary carbon market has been challenged with issues of transparency, credibility, and the availability of high-quality carbon credits, which has led to skepticism about nature and technological carbon removal as an effective tool to combat climate change,” said Kara Hurst, chief sustainability officer at Amazon. “However, the science is clear: We must halt and reverse deforestation and restore millions of miles of forests to slow the worst effects of climate change. We’re using our size and high vetting standards to help promote additional investments in nature, and we are excited to share this new opportunity with companies who are also committed to the difficult work of decarbonizing their operations.”
The Bureau of Land Management is close to approving the environmental review for a transmission line that would connect to BluEarth Renewables’ Lucky Star wind project, Heatmap’s Jael Holzman reports in The Fight. “This is a huge deal,” she says. “For the last two months it has seemed like nothing wind-related could be approved by the Trump administration. But that may be about to change.”
BLM sent local officials an email March 6 with a draft environmental assessment for the transmission line, which is required for the federal government to approve its right-of-way under the National Environmental Policy Act. According to the draft, the entirety of the wind project is sited on private property and “no longer will require access to BLM-administered land.”
The email suggests this draft environmental assessment may soon be available for public comment. BLM’s web page for the transmission line now states an approval granting right-of-way may come as soon as May. BLM last week did something similar with a transmission line that would go to a solar project proposed entirely on private lands. Holzman wonders: “Could private lands become the workaround du jour under Trump?”
Saudi Aramco, the world’s largest oil producer, this week launched a pilot direct air capture unit capable of removing 12 tons of carbon dioxide per year. In 2023 alone, the company’s Scope 1 and Scope 2 emissions totalled 72.6 million metric tons of carbon dioxide equivalent.
If you live in Illinois or Massachusetts, you may yet get your robust electric vehicle infrastructure.
Robust incentive programs to build out electric vehicle charging stations are alive and well — in Illinois, at least. ComEd, a utility provider for the Chicago area, is pushing forward with $100 million worth of rebates to spur the installation of EV chargers in homes, businesses, and public locations around the Windy City. The program follows up a similar $87 million investment a year ago.
Federal dollars, once the most visible source of financial incentives for EVs and EV infrastructure, are critically endangered. Automakers and EV shoppers fear the Trump administration will attack tax credits for purchasing or leasing EVs. Executive orders have already suspended the $5 billion National Electric Vehicle Infrastructure Formula Program, a.k.a. NEVI, which was set up to funnel money to states to build chargers along heavily trafficked corridors. With federal support frozen, it’s increasingly up to the automakers, utilities, and the states — the ones with EV-friendly regimes, at least — to pick up the slack.
Illinois’ investment has been four years in the making. In 2021, the state established an initiative to have a million EVs on its roads by 2030, and ComEd’s new program is a direct outgrowth. The new $100 million investment includes $53 million in rebates for business and public sector EV fleet purchases, $38 million for upgrades necessary to install public and private Level 2 and Level 3 chargers, stations for non-residential customers, and $9 million to residential customers who buy and install home chargers, with rebates of up to $3,750 per charger.
Massachusetts passed similar, sweeping legislation last November. Its bill was aimed to “accelerate clean energy development, improve energy affordability, create an equitable infrastructure siting process, allow for multistate clean energy procurements, promote non-gas heating, expand access to electric vehicles and create jobs and support workers throughout the energy transition.” Amid that list of hifalutin ambition, the state included something interesting and forward-looking: a pilot program of 100 bidirectional chargers meant to demonstrate the power of vehicle-to-grid, vehicle-to-home, and other two-way charging integrations that could help make the grid of the future more resilient.
Many states, blue ones especially, have had EV charging rebates in places for years. Now, with evaporating federal funding for EVs, they have to take over as the primary benefactor for businesses and residents looking to electrify, as well as a financial level to help states reach their public targets for electrification.
Illinois, for example, saw nearly 29,000 more EVs added to its roads in 2024 than 2023, but that growth rate was actually slower than the previous year, which mirrors the national narrative of EV sales continuing to grow, but more slowly than before. In the time of hostile federal government, the state’s goal of jumping from about 130,000 EVs now to a million in 2030 may be out of reach. But making it more affordable for residents and small businesses to take the leap should send the numbers in the right direction, as will a state-backed attempt to create more public EV chargers.
The private sector is trying to juice charger expansion, too. Federal funding or not, the car companies need a robust nationwide charging network to boost public confidence as they roll out more electric offerings. Ionna — the charging station partnership funded by the likes of Hyundai, BMW, General Motors, Honda, Kia, Mercedes-Benz, Stellantis, and Toyota — is opening new chargers at Sheetz gas stations. It promises to open 1,000 new charging bays this year and 30,000 by 2030.
Hyundai, being the number two EV company in America behind much-maligned Tesla, has plenty at stake with this and similar ventures. No surprise, then, that its spokesperson told Automotive Dive that Ionna doesn’t rely on federal dollars and will press on regardless of what happens in Washington. Regardless of the prevailing winds in D.C., Hyundai/Kia is motivated to support a growing national network to boost the sales of models on the market like the Hyundai Ioniq5 and Kia EV6, as well as the company’s many new EVs in the pipeline. They’re not alone. Mercedes-Benz, for example, is building a small supply of branded high-power charging stations so its EV drivers can refill their batteries in Mercedes luxury.
The fate of the federal NEVI dollars is still up in the air. The clearinghouse on this funding shows a state-by-state patchwork. More than a dozen states have some NEVI-funded chargers operational, but a few have gotten no further than having their plans for fiscal year 2024 approved. Only Rhode Island has fully built out its planned network. It’s possible that monies already allocated will go out, despite the administration’s attempt to kill the program.
In the meantime, Tesla’s Supercharger network is still king of the hill, and with a growing number of its stations now open to EVs from other brands (and a growing number of brands building their new EVs with the Tesla NACS charging port), Superchargers will be the most convenient option for lots of electric drivers on road trips. Unless the alternatives can become far more widespread and reliable, that is.
The increasing state and private focus on building chargers is good for all EV drivers, starting with those who haven’t gone in on an electric car yet and are still worried about range or charger wait times on the road to their destination. It is also, by the way, good news for the growing number of EV folks looking to avoid Elon Musk at all cost.