Microsoft and Brookfield Sign Biggest-Ever Clean Power Deal

(Bloomberg) -- Microsoft Corp. and Brookfield Asset Management’s green energy arm signed the biggest corporate clean-energy purchase agreement ever announced, as the technology giant ramps up its investment in artificial intelligence.

Brookfield Renewable Partners will provide more than 10.5 gigawatts of renewable energy capacity in the US and Europe starting in 2026, according to a statement Wednesday. That’s comparable to about 10 nuclear power plants and reflects the turbocharged demand for electricity from data centers and artificial intelligence. 

Technology companies are clamoring for more clean energy to meet their own climate goals, just as overall energy demand is rising. 

“It is absolutely the largest single announcement for a corporate clean-power purchase agreement ever,” BloombergNEF analyst Kyle Harrison said in a message. “It cements Microsoft as the second-largest corporate buyer of clean energy” through power purchase agreements, after Amazon. 

It’s difficult to estimate the cost for 10.5 gigawatts of new capacity because development costs vary significantly by energy type and location. But if all the development was US solar farms, they would cost more than $11.5 billion to build, according to BloombergNEF. Building that much US wind power would cost almost $17 billion.

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Shares of Brookfield Renewable Partners rose as much as 8.5% in New York, the biggest intraday increase since mid-November. Microsoft rose as much as 1.6%.

After minimal growth over the past two decades, US power consumption is forecast to expand quickly in response to demand from the new data centers needed to develop and run AI, as well as new factories and electric vehicles. Last month, power generator Exelon Corp. predicted a 900% jump in power demand from data centers planned in the Chicago area.

Such a dramatic forecast presents a challenge for technology companies to secure additional power supplies while simultaneously reducing emissions. Microsoft has a goal of matching all its electricity consumption with zero-carbon energy purchases by 2030.

Microsoft is pouring billions into developing its AI capabilities, and the data centers needed to support them, because it sees the technology as a key tool to attract customers for its cloud computing services.

AI tools are incredibly resource-intensive to run and many companies don’t have the data center capacity to support their own large-scale AI operations. Instead, they’re turning to big tech companies such as Microsoft, Google and Amazon.com Inc. for help running AI programs on the cloud.

Related:Microsoft to Invest $1.7 Billion in Indonesia for AI, Cloud

Just last week, Microsoft reported a 17% jump in revenue in the third quarter, totaling $61.9 billion, thanks to a surge in corporate demand for its cloud and AI offerings. On Tuesday, Amazon’s cloud unit posted the strongest sales growth in a year.

Microsoft and Brookfield said the deal is almost eight times larger than any other single corporate power-purchase agreement, and it may later be expanded to include new renewables capacity in Asia and Latin America.

The accord will focus on wind and solar, but also include “new or impactful carbon free energy generation technologies,” the companies said.