Although artificial intelligence (“AI”) dominated financial, technological, and even social conversations in 2024, less attention was paid to the reality that AI’s emergence entails substantial increases in energy demand, specifically electricity. Consider that a single ChatGPT query requires 2.9 watt-hours of electricity, compared to 0.3 watt-hours for a Google search, according to the International Energy Agency. Data centers housing tens of thousands of square feet of computing hardware power AI technology, and Goldman Sachs Research estimates those data centers will see power demand grow 160% by 2030, when these facilities will use an estimated 8% of all U.S. power.
Lawmakers and private sector leaders are assessing how to meet these expanding energy needs while promoting investment and achieving climate goals. Renewable energy thus seems set to expand alongside data center energy demand, but uncertainty regarding the role of renewables in the AI economy remains, leading to a mixed record in state legislatures. Notably:
- In Virginia, which is home to the most data centers in the U.S., 17 proposed bills regulating data centers, including a bill that would have tied tax exemptions to energy efficiency and renewable energy standards, and another that required quarterly reports on data center energy usage, were either left in committee or postponed until the 2025 legislative session.
- In New York, state legislators have noted that data center operations could threaten the goals of the Climate Leadership and Community Protection Act of 2019, which set a target of 70% renewable energy usage by 2030 in that state. To counter, state representatives have introduced the New York State Sustainable Data Centers Act, which would require data center operators to power their facilities with enough renewable energy to align with New York’s climate goals.
- Michigan’s legislature passed S.B. 237, which modifies the state’s tax code to exempt equipment employed in operating and constructing data centers from use tax. The law does require that all data center facilities, to the extent possible, procure or contract for power from renewable sources, and that certain facilities certify that they have or will procure clean energy equivalent to 90% of their forecasted electricity usage on an annual basis. Critics argue that the bill will undermine Michigan’s comprehensive clean energy package of legislation passed in 2023 which, among other aims, set a goal of 100% clean energy usage by 2024.
- Georgia Governor Brian Kemp vetoed H.B. 1192 in May of 2024, which would have paused tax exemptions for new data centers and created a special commission responsible for reviewing data center energy and water use, as well as mitigation technologies.
- Legislators in South Carolina and Connecticut are also reconsidering proposed incentive programs designed to attract data center development in part due to the facilities, even when utilizing renewable energy sources, reducing clean energy available for other users.
The most notable actors advancing clean energy to power data centers are the primary data center beneficiaries themselves – the dominant technology companies. On December 10, 2024, Google announced a strategic partnership with Intersect Power and TPG Rise Climate through which the parties will develop industrial parks with gigawatts of data center capacity in the U.S., co-located with and powered by new clean energy plants, in what Google is calling a “power first” approach to data center development. In May of 2024, Microsoft inked a deal with Brookfield Asset Management for the delivery of 10.5 gigawatts of renewable energy between 2026 and 2030 to power Microsoft data centers. Nuclear energy projects are resurging as tech giants have committed to nuclear power as a key resource to fuel data center and AI expansion, and the Three Mile Island nuclear plant is being repowered to supply Microsoft data centers. Amazon and Google have also committed to investing in small nuclear reactors to meet the surging energy demand of their data centers in connection with AI development.
As public and private decision makers prioritize economic development, climate goals, and technological innovation, the bolstering of renewable energy projects to power AI is not a given. Although it remains unclear whether effective legal frameworks will create incentives or requirements for clean energy utilization in connection with AI data centers, major tech companies, in furtherance of their stated climate goals, seem willing to focus on renewables as a primary power source for this next generation of economy shifting technology.
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