Google’s Biggest Ai Problem Is The Power Grid

Google is wrestling with its new role as an energy power player — one that’s thrust the tech giant into the world of arcane electric grid policy while it tries to defray the white-hot backlash against data centers.

For a company that is driving the future of artificial intelligence, the slow pace of tapping into U.S. grids to power its data operations is its most threatening test, Marsden Hanna, Google’s head of energy and sustainability policy, told POLITICO’s Energy podcast.

“The biggest challenge for us, for data center growth, is really grid congestion,” he said. “We have utilities telling us it can be five years, sometimes ten years, if you want to take grid-connected service.”

The tech industry’s multi-trillion dollar artificial intelligence buildout has put Google in the center of political fights over rising energy costs, climate change and the acceleration of new technologies that promise to lift economies while threatening virtual mayhem.

Google is scouring the country for energy sources, including massive new natural gas plants, as utilities, regulators and lawmakers struggle to keep pace with surging energy demand from hundreds of proposed data centers.

But Google declined to endorse a 400-page bipartisan Senate permitting bill that could test how tech companies wield their new influence as energy power brokers. Hanna said the legislation would achieve many of the company’s goals to hasten grid projects. Yet it would also establish the first legally enforceable provisions aimed at making the industry pay for the energy infrastructure it increasingly relies on.

“We do need the ability to construct at pace,” Hanna said. “We are hopeful that this bill will help do that.”

The tech industry’s deep pockets and AI’s massive power needs are colliding with utilities that have long had wide latitude over infrastructure decisions.

Companies like Google want to speed the planning process to build more transmission lines, which would help connect more power sources to the grid — and help power data centers. Many have installed their own power systems when they cannot get space on the grid. They also want to squeeze more from existing systems by financing upgrades at legacy generators or replacing old wires with more efficient ones.

Those methods are less attractive to regulated utilities that earn revenues from new capital projects. Yet the Senate permitting bill would clamp down on that decades-old business model: It would expand the federal role over transmission siting, require utilities to install advanced transmission technology where possible, and allow companies to sell power from their own systems back into the grid.

Hanna said Google only builds its own energy systems when no other option is available.

“Our strong preference is to take grid-connected service,” he said. “Where you are seeing companies do this through co-location, it's really just a reaction to the congestion and the inability to to use the grid as it was intended.”

Yet many of the tech industry’s so-called behind-the-meter projects have engendered community backlash. That’s because those data center developments often rely on natural gas or diesel generators, inviting fears about air pollution and public health. Even when tech companies link up to the grid, natural gas provides a sizable portion of electricity for data centers, Hanna said.

Google has tried to engage communities about its energy and water use, Hanna said. He acknowledged that data center developers have attracted negative attention for pushing projects in certain locations.

“There's a diversity of approaches across the industry. The data center sector is not a monolith,” Hanna said. “I can only speak to what we've done at Google, and I do think that we really do place a high priority on being good stewards of the footprint and being responsible members of the communities that we're a part of.”

Hanna said Google is making bets on the future that could reap significant environmental benefits. He noted Google has invested in large, early-stage clean technologies like geothermal and advanced nuclear. But those sources are a minor part of the power system today.

He acknowledged that the gobs of energy needed to fuel AI have complicated Google’s pledge to achieve net-zero emissions by 2030. Google’s emissions rose 18% last year compared to 2024, the company noted in its annual environmental report. The increase was largely due to AI.

“It's a challenge,” Hanna said. “The AI load growth trajectory has altered the focus and made this more difficult, but it's something we continue to focus on.”

Google is also navigating electricity backlogs by harnessing the grid’s latent capacity. The company earlier this month announced a 20-year, $4.3 billion deal to finance upgrades aimed at getting more electricity from Constellation Energy nuclear reactors.

Google also has a partnership with CTC Global, which makes advanced conductors that can extract more power from transmission lines. Hanna noted the Energy Department estimated the U.S. could wrangle an additional 100 gigawatts of power through those types of improvements. He expressed optimism that directives from the Federal Energy Regulatory Commission requiring utilities and grid planners to consider those options would usher in a spate of projects.

“In many parts of the country, the incentive structure we've designed for utilities encourages a different pathway,” Hanna said. “Utilities make in many parts of the country an authorized rate of return on every dollar they spend. And so we've given those partners a disincentive to deploy these kinds of solutions.”