Faced with soaring energy demands from its expanding AI operations, Microsoft is reportedly considering using natural gas to power its AI data centres.
Bobby Hollis, Microsoft’s vice president of energy, indicated that deploying natural gas with carbon capture technology is a possibility, contingent on the projects being “commercially viable and cost competitive.”
This comes as Microsoft invests heavily in AI infrastructure, with plans to spend approximately $80 billion this year on building out its AI capabilities, including data centres. The energy demands of these data centres are immense, prompting Microsoft to explore various energy sources.
Natural Gas as a Viable Option
Several factors contribute to the consideration of natural gas. The development of AI technology has sparked a surge in data centre development. In states where Amazon, Microsoft, and Meta are building giant data centre hubs, utilities want to power them with new natural gas plants.
Natural gas offers a seemingly reliable and cost-effective solution compared to other energy sources, which could help Microsoft maintain the high availability and performance of its data centres. Natural gas power is the fastest way to get power to data centres, although it has drawbacks.
Sustainability Concerns and Carbon Capture Technology
Despite the potential benefits, increased reliance on natural gas presents challenges to decarbonisation efforts. Microsoft has ambitious climate goals, aiming to match all of its electricity consumption with carbon-free energy by 2030.
The company’s 2024 sustainability report revealed a jump in greenhouse gas (GHG) emissions of almost a third, which most observers attributed to the energy requirements of Microsoft’s multi-billion dollar expansion of its AI capabilities.
To mitigate the environmental impact, Microsoft is considering pairing natural gas with carbon capture technology, which captures carbon dioxide emissions from industrial sites and stores them deep underground. Oil and gas companies have been developing carbon capture technology for years.
Microsoft’s Wisconsin Data Centre
Microsoft has committed to spending $3.3 billion on an AI data centre hub at the former Foxconn development site in Wisconsin’s Racine County. To meet that demand, We Energies, the local utility serving Microsoft, is seeking approval from Wisconsin’s Public Service Commission to spend roughly $2 billion on natural gas infrastructure, including a new plant with more than 1 GW of capacity.
Microsoft will use generators that rely on diesel or renewable fuel to provide backup power at its data centres as part of the company’s $3.3 billion data centre campus in Mount Pleasant.
Furthermore, it was recently reported that Microsoft has cancelled 200MW of AI data centre leases. Despite this, utilities in states like Louisiana and Wisconsin want to serve them with new natural gas plants.