The big tech companies used to be worried about updating the software and server racks. Now the issue they are concerned with is where the electricity is sourced from. As the power requirements for AI keep on breaking records, Alphabet has made up its mind that it will not just be an energy renter anymore, so it will go straight to the generator.
This is a $4.75 billion deal that not only makes Google’s AI convictions more clear, but also makes the company spend on the clean energy market.
Alphabet has confirmed to acquire clean energy developer Intersect in a cash deal at $4.75 billion, which includes the debt to be taken over. The strategy incorporates the fact that AI has drastically changed the IT sector by bringing computing power and energy supply together.
The deal brings along with it all the energy and data center projects of Intersect that are either being developed or are already being built. This move helps Alphabet to get a hold of the power that is going to be the main source of energy for its AI infrastructure in the upcoming years so they will be able to cut down their reliance on the already overburdened U.S grids that supply electricity to data centers.
Fuelling AI at an Exceptional Scale
The scale that comes along with Intersect is nothing but huge. The company is estimated to possess $15 billion worth of assets that are either operational or undergoing construction at present, and there is a power project with approximately 10.8 gigawatts of capacity that is expected to be online or under-development stage by the year 2028.
To put it into comparison, this is more than 20 times the annual production rate of the Hoover Dam’s electricity output. For Alphabet, this matter is not only a matter of being environmentally friendly, but is also a matter of being competitively practical in the AI market.
Building and operating large AI systems comes with the need for a huge and uninterrupted energy supply, and being the owner of renewable energy supplies will assist in getting both, the cost predictability and the power of the operation’s elasticity.
Broader Energy Strategy
The acquisition of Intersect is a step ahead of Alphabet into the energy industry. Earlier in the month, NextEra Energy, which is a leading utility company, extended its collaboration with Google Cloud for the purpose of forging new power supplies across the USA.
Thus, Google has made a consistent strategy for the future pairing of data centers with dedicated sources of energy. The advanced involvement of Alphabet with Intersect in a financial manner already took place last year when the company along with TPG Rise Climate backed the startup in an investment round of more than $800 million.
The investment also included the establishment of industrial parks, where clean energy plants will be hosting gigawatts of data center capacity co-located.
How Intersect Will Operate Post-Deal
Intersect being acquired, but it will still continue to work separately from Alphabet. The transaction will not include certain assets like its projects operational in Texas and its assets that are operational and under development in California. These will remain outside the deal, backed by existing investors.
Also, the Texas portfolio of Intersect has within it “Quantum,” which is a clean energy storage system that is currently being constructed adjacent to the Google data center campus. In the near future, Intersect will also develop and promote the new energy technologies required for the U.S Google data centers network and diversity of energy supply.
Bottom Line
Alphabet’s decision to purchase Intersect is a strong indication that in the age of AI, energy is not a mere utility anymore, but is a strategic asset. By committing to green power at a large scale, not only is Google making its operations environmentally friendly, but is also making its AI dreams more durable.
As the AI race heats up, maybe the possession of the power will be as critical as the possession of the algorithms.
