In a major move to secure its energy future for artificial intelligence, Alphabet Inc., the parent company of Google, has announced a landmark acquisition. The tech giant has agreed to purchase clean energy developer Intersect Power LLC for US$4.75 billion in cash, plus the assumption of existing debt. This deal, announced on Monday, represents one of Alphabet's largest strategic purchases aimed directly at expanding its data centre capacity to fuel the AI race.
The Power Struggle Behind AI Expansion
The acquisition is a direct response to a critical challenge facing Big Tech: the United States' aging power grids are struggling to meet booming electricity demand, driven in large part by the insatiable energy needs of artificial intelligence data centres. By bringing Intersect in-house, Alphabet aims to give Google more direct control and faster access to the massive amounts of power required to run and cool its AI servers.
This is not the first partnership between the two companies. Last year, Google took a minority stake in Intersect, entering into a partnership to build large-scale energy plants adjacent to Google's data centre campuses. This full acquisition signals a deepening commitment and a need for greater integration and speed.
Balancing Climate Goals with AI's Appetite
The deal highlights the difficult balancing act tech companies like Google, Amazon.com Inc., and Microsoft Corp. face. They have set ambitious climate goals but are simultaneously grappling with the enormous energy consumption of their AI infrastructure. In a stark illustration of this conflict, Google reported in 2024 that its carbon emissions had risen by 48% over the past five years, primarily due to data centre energy use.
Intersect, which is backed by private equity firm TPG Inc., specializes in clean energy solutions tailored for large data centres, including solar power and battery storage projects. The company has been actively marketing its capabilities to "hyperscalers" like Google, particularly promoting its projects in Texas. Intersect's CEO, Sheldon Kimber, has famously referred to Texas as "the Disneyland of energy" due to its abundant wind and solar resources.
Deal Structure and Industry-Wide Trend
Under the terms of the agreement, Alphabet will acquire Intersect's power development platform and its team, including the in-development assets already under contract to Google. However, Intersect will retain its own brand and continue to be led by CEO Sheldon Kimber. Assets in Texas and California that are contracted to other clients will remain separate, with TPG Rise Climate keeping a stake in those.
This acquisition is part of a broader wave of mergers and acquisitions sweeping the data centre and power industries, all fueled by the AI boom. Other players, like SoftBank Group Corp., are also reportedly studying acquisitions in the data centre space, while investment firms like Sandbrook Capital are snapping up utility companies to capitalize on the growing demand for electricity.
As Sundar Pichai, CEO of Google and Alphabet, stated, "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 U.S. innovation and leadership." With Intersect's portfolio of US$15 billion in energy assets either operating or under construction, Alphabet is making a colossal bet to power its AI-driven future.
