Microsoft’s AI datacenter push clashes with clean power goals

Microsoft is considering delaying or scaling back one of its most ambitious clean energy goals, as the rapid buildout of AI data centers puts pressure on its ability to meet the goal. Microsoft hasn’t announced it yet, but Bloomberg reports that the company is internally discussing hourly clean energy matching targets.

The company said it intends to meet 100% of its hourly energy use with clean electricity on the same grid by 2030. However, as Microsoft rushes to build out its AI data centers, there appears to be some internal debate about whether this commitment is hindering the company’s ambitions.

Microsoft declined to comment on internal discussions over hourly matching targets. Instead, a spokesperson told TechCrunch that the company “continues to explore opportunities to maintain our annual matching goals.”

Hourly goals, like the ones Microsoft sets for themselves, are more rigorous than annual goals. The grid is a balanced system, so the supply and demand for electrons must match almost instantaneously. Time-by-hour matching helps develop clean energy sources that more closely match a company’s usage patterns.

Annual goals are more modest. These are effectively accounting tricks that allow companies to buy more solar power than they use during the day, for example. Other customers on the grid will also use that energy, but the company that paid for the solar panels will be billed for the renewable electricity they produce. This is a neat deal that will encourage the deployment of wind, solar and batteries. However, annual targets alone cannot completely phase out fossil fuels. Hourly targets will help foster renewable development that more closely mimics how power is delivered in a true net-zero world.

Big tech companies such as Microsoft, Meta, Google and Apple are generally leading the way in reducing emissions, setting aggressive net-zero targets. Many companies are reducing their carbon emissions on an annual basis. Microsoft, for example, said it met that goal last year.

But as data centers grow in size and number, those companies are turning to natural gas. That list also includes Microsoft. Last month, the company announced it would work with Chevron and Engine No. 1 to build a large-scale natural gas power plant in West Texas that could eventually generate up to 5 gigawatts.

Despite the West Texas project, Microsoft is widely considered a leader among technology companies pursuing net-zero emissions. By 2030, Microsoft plans to remove more carbon from the atmosphere than its operations generate.

Part of the company’s renewable energy push is driven by an internal carbon tax. A Microsoft spokesperson did not respond to questions about the company’s carbon tax. If this system is maintained, part of the internal discussion around hourly matching is likely to revolve around an analysis of the cost-benefit of shifts.

If Microsoft abandons its hourly matching goal, the company will lose some leverage in its efforts to sell data centers to the public.

As data centers proliferate, the general public has begun to oppose them, citing concerns about pollution, power prices, and water usage. Microsoft could plausibly address two of those concerns by bringing its own clean power to the project. Without it, it could be difficult to sell new data centers to the public.