There is some “prevailing thinking” that the monstrous new energy growth attributable to data centers will be met predominantly with gas and other “firm” fossil fuel or nuclear power because renewable energy is too intermittent, and load factors of data centers are high. I tend to disagree. This line of thinking is overly simplistic because it ignores the current status of the queue, battery advancements, and the overwhelming favorable economics of solar, wind, and storage.
Bottom line up front: my predication is that most of the incremental energy sources will be met with renewable power comprised of solar and wind (in that order), with significant battery storage firming intermittency.
I had a deep conversation with Spencer Littleford Kimball of CNBC where we discussed this topic; in particular, that solar, and solar plus storage, with 1300 GW of queue positions in the USA, have 25X the interconnection positions in the electric transmission queue vs gas. The new, ultra-large data centers have grown an order of magnitude in recent years, and gigawatts in some cases, with the International Energy Agency (IEA) forecasting an astonishing +115 TWh per year of demand. We are seeing a huge surge in power demand for these facilities and renewables are in the best position to fill most of that need. Lower cost, rapid deployment, and environmentally friendly are all things Big Tech is looking for, and renewable energy checks each box. Solar, with 7,000 projects advancing in grid connection in the U.S. alone, is complementary to wind, which typically produces most energy during the evening. New highly responsive gas turbines will likely play a role in firming, particularly in areas where grid capacity is available for data centers but renewable resources are more remote. But these units have significantly more emissions than combined cycle gas.
At the end of the day, the economics of renewables with storage, speed of deployment of environmentally preferred generation, and availability of capital for lower risk assets will provide ongoing accelerating of solar and wind in the grid. More info at www.nextracker.com
Shug
