The case for colocating data centers and generation

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Feb 13, 2025

Sheldon Kimber, Founder and CEO of Intersect Power, discusses innovative solutions for the energy demands of data centers. He highlights the broken grid's challenges and advocates for colocating power generation with data centers to enhance clean energy access. The conversation dives into the influence of AI on energy needs, optimal Power Purchase Agreement structures, and emerging market dynamics from renewable collaboration. Kimber also speculates on the potential of hydrogen and crypto megasites, shaping the future of energy consumption.

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INSIGHT

Market in Limbo

The U.S. solar and storage market is in limbo, driven by supply-side policies and demand from AI and electrification.
Uncertainty exists due to unpredictable macro factors like tariffs and the evolving political landscape.

INSIGHT

PPA Price Evolution

PPA prices have risen, reflecting the increased cost of inputs and stabilizing developer margins.
Longer-term contracts are becoming more common due to these higher price points, offering more stability.

INSIGHT

Co-location Rationale

Co-locating power generation with data centers addresses the challenges of grid capacity and speed.
This approach allows for faster deployment and scalability of renewable energy resources for data centers.

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Sheldon Kimber says the grid is broken — at least for new data centers and other large, industrial loads that need lots of clean power, fast.

But the founder and CEO of Intersect Power believes there’s a workaround that enables larger data centers and speeds up time to power: colocating behind-the-meter generation and storage on megasites rich with renewable resources.

In short, instead of bringing clean generation to load, bring load to clean generation. Major partners are on board with the strategy. Last December Intersect announced $800M in investment from Google and private equity firm TPG, along with a goal of catalyzing $20B in projects by 2030.

So how does colocation work? And how far does it go?

In this episode, Shayle talks to Sheldon about how colocation can help sidestep the challenges associated with grid upgrades, transmission, and permitting. They dig into topics like:

Major forces shaping the market, like AI demand, the IRA, and tariffs
Optimal PPA prices and tenures
The right mix of grid-connected and behind-the-meter power
The extreme version of colocation: off-grid data centers
Megasite developers for hydrogen and crypto and how they took advantage of the AI boom
Whether DeepSeek will cause energy demand to temper or accelerate

Recommended resources

Latitude Media: Google’s new data center model signals a massive market shift
Latitude Media: Load growth is changing how Silicon Ranch develops solar projects
Latitude Media: Amazon’s data center strategy: ‘Get back to being grid-tied’
Catalyst: The US power demand surge: The electricity gauntlet has arrived

Credits: Hosted by Shayle Kann. Produced and edited by Daniel Woldorff. Original music and engineering by Sean Marquand. Stephen Lacey is executive editor.

Catalyst is brought to you by EnergyHub. EnergyHub helps utilities build next-generation virtual power plants that unlock reliable flexibility at every level of the grid. See how EnergyHub helps unlock the power of flexibility at scale, and deliver more value through cross-DER dispatch with their leading Edge DERMS platform, by visiting energyhub.com.

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