(Dec 23): Alphabet Inc has agreed to buy clean energy developer Intersect Power LLC for US$4.75 billion ($6.11 billion) in cash, plus existing debt, marking one of the largest deals by the tech giant to dramatically expand its data centre footprint for artificial intelligence (AI).
The acquisition, announced on Monday, is intended to give Alphabet’s Google access to more electricity for its data centres as ageing US grids struggle to meet power demand that’s booming for the first time in decades thanks in part to AI. Google took a minority stake in the energy provider last year by entering a partnership with Intersect to build big energy plants next to data centre campuses, Bloomberg previously reported.
“Intersect will help us expand capacity, operate more nimbly in building new power generation in lockstep with new data centre load, and reimagine energy solutions to drive US innovation and leadership,” said Sundar Pichai, the chief executive officer of Google and Alphabet, in a statement.
The AI race has spurred mergers and acquisitions in the data centre and power industries. SoftBank Group Corp has been studying potential acquisitions, including data centre operator Switch Inc. Sandbrook Capital said on Monday it’s purchasing utility firm United Utility Services as demand for electricity grows.
The Intersect deal marks the first time a big tech firm has bought a major renewable energy developer and “reaffirms Google’s intentions to power its data centres with clean energy”, said Ben Hertz-Shargel of energy consultancy Wood Mackenzie Ltd.
Google, along with Amazon.com Inc and Microsoft Corp, has been struggling to balance its ambitious climate goals with the growing energy demands from AI. In 2024, the company said its carbon emissions went up by 48% in the past five years due to its data centre operations.
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Intersect, backed by private equity firm TPG Inc, has focused on clean energy solutions to help power large data centres, including solar and battery storage projects. The company has been in close touch with hyperscalers this year marketing enormous facilities in Texas, which Intersect’s chief executive officer Sheldon Kimber has called “the Disneyland of energy” for its abundant wind and solar resources.
Intersect has about 7.5 gigawatts of solar and storage in operation, with another eight gigawatts in its development pipeline, Hertz-Shargel said, with much of that in the data-centre hotspot of Texas. (A gigawatt is roughly the output of a single nuclear reactor and can power about 750,000 homes.) According to its website, the company has US$15 billion of energy assets in operation or under construction in the US.
As part of the deal, Alphabet will acquire Intersect’s power development platform and team, including the existing in-development assets that are already contracted by Google, according to an Alphabet spokesperson.
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Intersect will retain its own brand separate from Google and continue to be led by Kimber. The firm’s grid assets and those contracted to other customers in Texas and California — some operating, some in development — that are contracted for other clients will not be part of the purchase. TPG Rise Climate, which had invested in Intersect previously, will retain a stake in those assets.
The deal also reduces regulatory risk for Google, Hertz-Shargel said. While a third-party like Intersect powering a Google data centre could be deemed a violation of the local utility’s franchise rights, Google self-powering its own facilities would not, according to Hertz-Shargel.
“By acquiring a developer and not just a power purchase agreement, Google is buying itself the flexibility to build where and when it needs,” he said.
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