Alphabet said it will acquire Intersect, a startup focused on energy for data centers, for $4.75 billion and the assumption of debt. Google, a unit of Alphabet, owns a minority stake in Intersect.
Last year, Intersect announced a partnership with Google and TPG Rise Climate to scale renewable power and storage for new data centers.
As cloud providers, notably Google Cloud, AWS, Microsoft Azure and Oracle, scale data centers power becomes the largest hurdle.
In a statement, Alphabet said that Intersect will remain separate from the company and Google. However, Intersect will work with Google's technical infrastructure team to develop projects. Intersect and Google are already collaborating on a co-located data center and power site in Haskell County, Texas.
The focus of the deal is on new assets and don't include Intersect's existing assets in Texas and California. Those Intersect assets will remain independent with the company's existing investors. Sheldon Kimber, CEO of Intersect, will continue to lead the company. Intersect has $15 billion of infrastructure operating or under construction and plans to have 10.8 GW in construction or operating by late 2028. Intersect also has partnerships with Tesla and First Solar as well as Google.
According to Alphabet and Google CEO Sundar Pichai, Intersect will "will help us expand capacity, operate more nimbly in building new power generation." Alphabet and Google said Intersect will augment its energy efforts underway with utilities and energy developers.
"For a long time we thought the AI race was all about the GPUs, but Alphabet's investment in Intersect makes it clear - it's all about energy. Without energy, there's no data center, no GPUs (or TPUs for Google) and no AI," said Holger Mueller, an analyst at Constellation Research.
In a blog post, Kimber said:
"AI today is stuck behind one of the slowest, oldest industries in the country: electric power. The country has racks full of GPUs that can’t be energized because there isn’t enough electricity for them. The grid is a patchwork operating system that’s been running for a century. An engineering miracle in its time but not built for the AI era.
America deserves a better business model for electricity. That model is increasingly 'bring your own generation.'"
