Amazon bets $150 billion on data centers required for AI boom

In Oregon, electricity use by Amazon server farms exceeds the local utility’s share of hydroelectric power, forcing it to buy electricity generated by natural gas, the Oregonian newspaper reported earlier this year.

“There’s a lot more vetting that is occurring upfront and detailed planning that is required from the utility companies to understand how real the project is because there’s so much demand out there that was not there five years ago,” said Ali Greenwood, an executive director at the data center practice of Cushman & Wakefield, a commercial real estate firm.

So Amazon is getting creative.

In February, the company said it would spend about $10 billion on two data center campuses in Mississippi. Billed as the largest corporate project in state history, AWS’s effort will plant roots in the southern U.S., a region that has seen comparatively little data center spending outside of major cities like Dallas and Atlanta.

Earlier this month, the operator of a 40-year-old nuclear power plant on the Susquehanna River in Pennsylvania said AWS had agreed to spend $650 million to acquire a data center campus connected to the facility.

In Round Rock, Texas, AWS recently won zoning approval to build a data center and electrical substation next to a delivery depot on a slice of a former ranch the company acquired during a pandemic-era spending spree. If the project proceeds, it will be the first time the company has put such facilities on the same piece of land.

“Right now it’s just a mad scramble for any place that has power any time soon,” said Charles Fitzgerald, a former Microsoft manager and Seattle-based investor who tracks cloud company spending.

Even as it ramps up, Amazon and other companies are encountering growing opposition to data centers. Much of the current animus is centered in Virginia, where residents complain about server farms’ incessant hum and preservationists lament the sprawling facilities’ encroachment on Civil War battlefield sites. But pockets of resistance are popping up in other parts of the U.S. and could grow as more and more data centers come online—whether they are built by Amazon or not.

Renewable energy advocates also say the rush to build new facilities has given new life to old plants powered by planet-warming fossil fuels, and even helped make the case to build new ones. In Mississippi, for example, Amazon will pay to help the local utility to build solar farms, but the company will also operate the data centers with a new natural-gas power plant that will probably operate for decades.

“Companies like Amazon are going to have to use their buying power to actually force the utilities to change their behavior,” said Daniel Tait, research and communications manager with the Energy and Policy Institute, a utility watchdog that backs renewables. “Not only are they inducing more fossil fuel use, but they are creating the precedent that everybody who comes after them will do the same.”

In recent years, Amazon has been the world’s largest corporate buyer of renewable energy, part of a pledge to power all of its operations with renewable electricity by 2025. But those projects can be far from its data centers, a mismatch between supply and demand that bedevils the fractured and aging U.S. power grid.

Amazon data center chief Miller said the company was continuing to evaluate clean energy projects beyond wind and solar farms, including battery storage and nuclear power, that can substitute for fossil fuel plants. He pledged to work with utilities and find a way to “match our need for energy with renewable, carbon-free power.”