Microsoft is considering the use of natural gas equipped with carbon capture technology to power its artificial intelligence (AI) data centers. Tim Donovan, Vice President of Energy at Microsoft, highlighted that this option is not off the table, provided it proves to be commercially viable and cost-effective.
Industry Trends in Power Solutions
Recent developments have seen major oil companies like Chevron and Exxon Mobil venturing into natural gas solutions tailored for data centers. Historically, the tech sector has leaned heavily on renewable energy sources. However, with increasing energy demands from data centers, there is a noticeable shift towards alternative power strategies.
Natural Gas and Carbon Capture
While carbon capture technology, which focuses on sequestering carbon dioxide emissions underground, has been in development for years, its application at a commercial scale has posed challenges due to high costs. Microsoft aims to match all of its energy consumption with carbon-free sources by 2030 and has secured over 30 gigawatts of renewable energy to chase that objective. Nevertheless, industry leaders acknowledge that renewable energy alone may not suffice to meet the burgeoning energy demands of data centers.
In addition to exploring natural gas, Microsoft’s energy strategy has included backing nuclear power through a partnership to reactivate the Three Mile Island facility. However, additional nuclear power developments in the U.S. are not anticipated until the 2030s.
Natural Gas as a Short-Term Solution
As data center developers seek immediate answers, natural gas is being eyed as a viable interim power option, despite its carbon emissions. Energy Secretary Chris Wright recently indicated that the potential of renewable energy cannot fully replace the role of natural gas in electricity production.
“We’ve always been aware that fossil fuels will not disappear as rapidly as many would like,” said Donovan. He emphasized that natural gas remains a key solution, especially in light of the rising power requirements associated with AI technologies.
Furthermore, in December, Exxon and Chevron announced initiatives to create natural gas plants integrated with carbon capture for data center applications. Chevron’s January partnership with GE Vernova outlines plans to construct gas facilities with adaptable carbon capture capabilities.
Challenges Ahead for Deployment
Despite the momentum behind natural gas, there are significant challenges to deploying it effectively. Costs associated with building new natural gas plants have surged, resulting in projected construction timelines extending into 2030. John Ketchum, CEO of NextEra, a leader in renewables, emphasized that renewable sources can be activated quickly, as they are already operational and more cost-efficient compared to new gas projects.
“Renewables can be implemented immediately due to their existing infrastructure,” Ketchum stated. Meanwhile, nuclear energy, viewed as a long-term solution, is unlikely to come onstream until 2035, with NextEra evaluating the potential restart of the dormant Duane Arnold nuclear plant in Iowa.
With all these factors at play, the tech industry is at a pivotal crossroads regarding energy solutions, weighing immediate needs against long-term sustainability goals.
