U.S. Data Centers Voice Concerns: Trump's Attack on Green Energy Threatens U.S. Competitiveness in AI Race
The Unfriendly Winds of Change: A Warning Signal for the US Data Center Industry and the Global AI Race
The US data center industry is raising red flags over the Trump administration's hostile stance on renewable energy, fearing it could hinder growth and compromise Washington's goal to lead the global artificial intelligence (AI) race.
The renewable energy sector has become a powder keg since President Trump's second term, prompting suspensions of clean energy developments on federal land, freezing federal loans, and most recently, axing high-profile projects such as Equinor's $5bn Empire Wind site.
For tech companies grappling with securing dependable energy sources to fuel and train AI, a clampdown on renewables might create energy bottlenecks, intensify costs, and compel operators towards less environmentally friendly energy options, experts warn.
Simon Ninan, senior vice-president at Hitachi Vantara, which manufactures equipment and infrastructure for data centers, asserts the Trump administration's antagonistic approach towards renewable energy makes it almost impossible to meet the expanding data growth demands.
"Strategically, the US could risk sabotaging its current leading position in the global AI race, while China has instrumentally moved forward with grid modernization and efficient power distribution," Ninan stated.
According to him, energy shortages resulting from prolonged conflicts with the renewable sector could lead to the cancellation or delay of data center buildouts or infrastructure upgrades.
Certainly, the Trump administration argues that losing the AI race to China poses a more significant threat to the world than global warming and advocates an increased use of fossil fuels to power AI. However, experts caution that meeting the escalating demand without incorporating a significant amount of renewable energy capacity will be arduous, given that renewable energy options are generally faster and more cost-effective to deploy than constructing fossil fuel power plants.
The assault on renewable energy has little wonder alarmed Democratic leaders in northeastern states which banking on the growth of wind energy to meet future electricity requirements. On Monday, a coalition of Democratic attorneys-general from 17 states sued the Trump administration to block its attempts to halt the development of wind energy.
Data centers are projected to add a staggering 83.7 gigawatts of energy demand by 2030, equivalent to adding a new state the size of Texas to the grid, according to the Center for Strategic and International Studies think-tank. While numerous companies are investing in nuclear small modular reactor technologies, it might take several years before they become operational.
"We've witnessed escalating competition for green energy over the past couple of years," said Nick Hertlein, a managing director at Stonepeak, an alternative investment firm focusing on infrastructure and real assets.
"If US AI development is a priority, policymakers need to devise ways to accommodate the data center industry's growth," he added.
While large-scale gas generation projects are being expedited by major grid operators such as PJM, MISO, and ERCOT, this could come at the expense of cheaper energy sources like renewables. Meanwhile, gas turbine suppliers like Siemens and GE Vernova have revealed that lead times for larger gas turbines might stretch until 2029.
"If we cannot bring on new, lower-cost resources as demand surges, we'll be forced to rely heavily on more expensive resources," stated Rich Powell, chief executive of the Clean Energy Buyers Association.
"We just need to flood the zone with new electricity as quickly as we can," Powell emphasized.
Despite the clout of tech giants, they might find it challenging to cajole the administration into relaxing restrictions on new power sources. Smaller scale operators, on the other hand, might face a holding pattern as they wait to see if regulatory hurdles and tariffs on renewable equipment are lifted.
"On average, they will likely find ways to absorb additional costs and resort to less eco-friendly energy sources," Ninan said.
Amazon, the largest corporate purchaser of renewable energy globally, underscores that carbon-free energy remains paramount for meeting expanding demand for power, reducing costs, and achieving climate goals.
"Renewable energy arrangements were 'no-brainers' because they lowered our power costs," said Kevin Miller, vice-president of Global Data Centers at Amazon Web Services.
Worries about political meddling stretch beyond the data center sector. Efforts by state and local governments to thwart renewable energy could set back the industry. In Texas—the third-largest US data center market, according to S&P Global Market Intelligence—a spate of bills are under deliberation that increase regulation on solar and wind projects.
"We have an incredible opportunity in front of us with these data centers," said Doug Lewin, president of Stoic Energy. "Virginia can only accommodate so much, and we can build faster here. But any of these bills passing would stifle that growth in the crib."
The renewable energy crackdown would jeopardize the ability of "hyperscale" data centers operated by companies such as Equinix, Microsoft, Google, and Meta to offset their emissions and invest in renewable energy sources.
"Demand for renewables has never been higher," said Christopher Wellise, sustainability vice-president at Equinix. "So when you couple that with additional constraints, there could be some short to midterm challenges".
- The US data center industry is concerned that the Trump administration's hostile stance on renewable energy could hinder its growth and compromise Washington's goal to lead the global AI race.
- For tech companies, a clampdown on renewables might create energy bottlenecks, intensify costs, and compel operators towards less environmentally friendly energy options.
- Simon Ninan warns the US could risk sabotaging its current leading position in the global AI race if it prioritizes fossil fuels over renewable energy.
- Energy shortages resulting from prolonged conflicts with the renewable sector could lead to the cancellation or delay of data center buildouts or infrastructure upgrades.
- In 2030, data centers are projected to add a staggering 83.7 gigawatts of energy demand, equivalent to adding a new state the size of Texas to the grid.
- Nick Hertlein asserts that policymakers need to devise ways to accommodate the data center industry's growth if US AI development is a priority.
- While efforts to expedite large-scale gas generation projects could come at the expense of cheaper energy sources like renewables, gas turbine suppliers are revealing lead times for larger gas turbines might stretch until 2029.
- Rich Powell states that if we cannot bring on new, lower-cost resources as demand surges, we'll be forced to rely heavily on more expensive resources.
- Houser, vice-president of Global Data Centers at Amazon Web Services, emphasizes that carbon-free energy remains paramount for meeting expanding demand for power, reducing costs, and achieving climate goals.
- The renewable energy crackdown could set back the data center industry by jeopardizing the ability of hyperscale data centers to offset their emissions and invest in renewable energy sources.
