Microsoft inks $10 billion deal to power AI with renewables
Partnership will result in the construction of large-scale wind and solar farms
Tech giant Microsoft has struck a landmark deal with Brookfield Asset Management, committing to back an estimated $10 billion in new renewable energy projects.
The agreement marks the largest ever corporate purchase of renewable energy, aiming to address the ever-growing power demands of AI and datacentres.
Under the terms of the deal, Brookfield will develop 10.5 gigawatts (GW) of renewable energy capacity for Microsoft between 2026 and 2030.
This energy, enough to power roughly 1.8 million homes, will be added to the grids that supply datacentres, and will result in the construction of large-scale wind and solar farms in the US and Europe.
The 10.5 GW of renewable capacity dwarfs the current electricity consumption of Northern Virginia, the world's largest datacentre market, which sits at a mere 3.5 GW. The potential for expansion is even more significant, with the companies hinting at including additional capacity in Asia, Latin America, and India.
"As the global trend of digitalisation and the adoption of AI continues to drive growth in demand for electricity, we are thrilled to collaborate with Microsoft to support their customer demand with the build-out of over 10.5 gigawatts of renewable energy capacity," said Connor Teskey, CEO of Brookfield Renewable and President of Brookfield Asset Management.
"This first of its kind agreement, which is almost eight times larger than the largest single corporate PPA ever signed, is a testament to our ability to reliably deliver clean power solutions at scale to our corporate partners and accelerate the energy transition," he added.
Adrian Anderson, overseeing Renewables, Carbon-Free Energy, and Carbon Dioxide Removal as General Manager at Microsoft, expressed the company's aim to leverage its influence and purchasing power to create a positive impact for all electricity consumers.
The deal comes at a crucial time for the United States. The rise of AI and the burgeoning domestic production of semiconductors, batteries, and electric vehicles are creating a surge in electricity demand.
Forecasts predict a 20% increase in total US electricity consumption by the end of the decade, necessitating a significant shift towards clean energy sources.
The International Energy Agency (IEA) predicts that datacentres will consume over 1,000 terawatt-hours of electricity globally by 2026, more than double 2022 levels.
This surge in demand is placing a strain on power grids, raising questions about reliability and the ability to integrate renewable energy sources effectively.
Microsoft's deal with Brookfield is a big step towards a future powered by clean energy.
In recent years, many large tech firms have made some big environmental pledges. Microsoft has announced an ambitious goal of achieving 100% carbon-neutral electricity consumption by 2030 through renewable energy purchases. In 2019, Amazon announced a string of measures aimed at lowering its greenhouse gas emissions. In 2020, Apple pledged to become 'carbon neutral' throughout its entire business, manufacturing supply chain and product life cycle by 2030.