Google parent Alphabet said it would acquire data center and clean energy developer Intersect for $4.75 billion to help the firm secure the power needed to stay competitive in the artificial intelligence race.
Intersect, backed by private equity group TPG, builds renewable energy plants to power data centers used for AI computing. In late 2024, it announced a funding round with Google and said the companies aimed to provide $20 billion in data-center capacity investment by the end of the decade. That announcement also included plans to develop industrial parks to house data centers alongside new clean energy plants.
The Beaverton, Oregon-based startup will still operate independently under CEO Sheldon Kimber following the massive cash deal, which also includes its debt and is expected to close in early 2026. Intersect will “explore a range of emerging technologies” to increase and diversify the supply of energy to support Google’s data center investments, Alphabet said in a press release.
“Intersect will help us expand capacity, operate more nimbly in building new power generation in lockstep with new data center load, and reimagine energy solutions to drive US innovation and leadership,” Alphabet CEO Sundar Pichai said in a statement.
Big tech players such as Alphabet, Microsoft, Amazon and OpenAI have committed to spending hundreds of billions of dollars on the data centers that power artificial intelligence. The U.S. grid is already struggling to meet exploding demand.
Alphabet said Intersect’s assets in Texas and California wouldn’t be part of the acquisition and would instead be operated by other existing investors.
“Modern infrastructure is the linchpin of American competitiveness in AI. We share Google’s conviction that energy innovation and community investment are the pillars of what must come next," Kimber said in a statement.
Biggest buildout
Big tech players including Alphabet have said they intend to spend hundreds of billions of dollars to fund the race to reach artificial general intelligence, a technology that some professionals say could soon outperform the smartest humans with the help of a massive buildout of data center real estate.
Representatives from the tech and utility sectors, as well as academics, have said the available electric power can't support projected growth in data center demand.
This month, Google announced a partnership with U.S. utility company NextEra Energy to develop multiple data center campuses with maximum compute capacity. Under the terms of the deal and others struck by the tech giant, the company shares costs with the utility or real estate investment trust spearheading the development, thereby addressing the difficulty of obtaining financing and land to build the sprawling facilities.
“Energy and technology are becoming inextricably intertwined,” NextEra Energy CEO John Ketchum said in a statement this month.
AI and machine learning has higher power and water requirements than traditional cloud computing. And AI is expected to drive a 165% increase in data center demand by 2030, Goldman Sachs said in a forecast.
Google said it intends to spend $40 billion in Texas to develop data centers for artificial intelligence and support programs over the next two years, representing the search engine giant’s largest investment in any U.S. state. It also plans to invest in the Lone Star State’s power grid, water resources, training programs and agriculture industry to partially offset any negative effects of its ambitious data center plans.
These real estate plans could help Google's AI chatbot, Gemini, compete with OpenAI’s ChatGPT.
The search giant launched a new Gemini model this fall that it says surpassed OpenAI’s models and those of other competitors in tests. In response, OpenAI Chief Executive Sam Altman declared a “code red” to focus on improving ChatGPT, The Wall Street Journal reported.
Sales from Google's cloud division, which sells computing power to data centers, increased 34% in the most recent quarter.