Among President Biden’s last executive orders (EOs) was one signed last Tuesday to accelerate development of data centers to help power the AI revolution—an order that also mandates that these data centers are powered by emissions-free electricity.
The White House directed the Department of Defense (DOD) and Department of Energy (DOE) to lease federal sites for gigawatt-scale AI data centers and clean power facilities.
The sites will be chosen based on access to transmission infrastructure and minimal environmental impact. Competitive bids will be held for private developers to build, own, and operate these facilities — with a requirement to match their energy needs using clean energy.
The Department of Interior will support this initiative by streamlining permit processes for geothermal projects and identifying clean energy sites.
Josephine Tucker, Americas Head of Energy Advisory and Sustainability, JLL, explained one of the biggest challenges with renewables is their “stochastic” or variable energy production factor.
For example, solar or wind only produce energy during a portion of the day, while fossil-fueled or baseload-power supply like nuclear, produce all day long.
“Mission-critical assets like data centers require a consistent and very high-quality energy source and cannot afford any downtime,” she said.
This makes it extremely difficult for a data center to be supplied by 100% renewable energy, unless its nuclear – or some combination of grid-supplied power and on-site renewables.
However, carbon capture and storage (CCS) combined gas turbines – or technologies that balance energy supply and demand like battery storage or microgrids – do have the potential to increase the proportion of renewable energy used while maintaining resiliency.
Kristen Vosmaer, JLL’s managing director for data center work dynamics, added there has been an increase in power purchase agreements (PPAs) that allow for load shedding, as well as power being sent to the grid from microgrids.
“Operationally, the utilities and data center operators have worked well together to avoid grid impacting issues, and data centers can act as a good neighbor in this area,” he said.
If the reliance for this comes from diesel backup generators, then municipalities, utilities and developers will also need to work together on air quality and/or emissions permitting.
“We see big tech investing in the regional power grid with the building and expansion of substations and transmission lines,” Vosmaer added.
Jim Kozlowski, chief sustainability officer and vice president of data center operations at Ensono, said more data center developers will pursue projects given the aspects of this executive order.
“The big outstanding issue is how much the Trump administration will support this executive order versus looking to change or adjust the details through the DOD or DOE,” he said.
He explained clean energy developments are more difficult or complex than traditional fossil fuel development, which would likely slow AI development somewhat.
“However, if the elements of this executive order are followed, these issues could be mitigated,” he said. “We have seen several significant partnerships announced in 2024 between hyperscalers and developers which include clean energy production and transmission.”
Kozlowski added the massive uptake of AI computing capacity is far from guaranteed. “I would estimate that data center growth and power consumption will be more tempered than the 9% potential level, given where we stand today in our power grid upgrades and development,” he predicted.
He noted private sector data center developers have shown a great ability to raise capital and the willingness to spend it over the past 5-10 years.
“The data center developers will jump at the chance to provide capital and drive development if the federal agencies make it easy,” Kozlowski said.
