Google parent Alphabet agreed to buy Intersect Power, a data center and clean energy developer. The acquisition price is set at $4.75 billion in cash plus the assumption of the company’s debt.
The deal announced Monday will help Alphabet bypass energy grid bottlenecks. The company will expand power-generation capacity alongside new data centers without relying on local utilities.
AI’s Hunger for Energy
Training AI models requires massive amounts of energy. Securing access to power for data centers has become critical. Local utilities are struggling to keep up with demand from AI companies.
Alphabet decided to solve this problem by acquiring its own energy production facilities. Intersect Power develops data parks located next to wind, solar, and battery power installations.
Previous Partnership Turns Into Acquisition
Alphabet previously held a minority stake in Intersect Power. Last December, Google and TPG Rise Climate led an $800 million strategic funding round in the company. That partnership set a target of $20 billion in total investment by 2030.
Now Alphabet is taking the next step by acquiring the entire company. However, the acquisition includes Intersect’s future development projects but excludes existing operations. That portion will be bought out by other investors and managed as a separate company.
Full Capacity by 2027
According to Google’s announcement, Intersect’s new data parks are expected to be operational late next year. The facilities will reach full capacity by 2027.
These data parks are essentially locations positioned next to wind, solar, and battery power sources. Proximity to energy sources eliminates grid dependency.
The transaction is expected to close in the first half of next year.
Not Just for Google
Google will be the primary user of the facilities. However, Intersect’s campuses are designed as industrial parks. They can host other companies’ AI chips alongside Google’s hardware.
This structure opens additional revenue streams for Alphabet. The company could provide energy and infrastructure services even to competitors.
Tech Giants Chase Energy
Alphabet’s move is the latest example of the industry’s energy race. Microsoft is signing nuclear energy deals. Amazon is developing renewable energy projects for its data centers.
The AI boom increased energy demand faster than anticipated. Traditional power grids aren’t prepared for this load. Tech giants are turning to their own solutions.
Alphabet’s $4.75 billion investment marks a significant move in this race.
