(Reuters) - Alphabet (NASDAQ:GOOGL)'s Google, along with TPG Rise Climate and other investors, is backing clean energy developer Intersect Power as part more than $800 million funding round, the company said on Tuesday.
Google's capital investment in Intersect Power comes as the tech giant, like other "hyperscalers" including Microsoft (NASDAQ:MSFT) and Meta (NASDAQ:META), races to bolster its domestic data center capacity to meet the AI-driven surge in cloud demand.
The company is also partnering with Intersect and TPG Rise Climate to develop industrial parks. These parks will house gigawatts of data center capacity co-located with new clean energy plants.
By building data centers next to purpose-built, carbon-free energy sources, Google aims to ease power grid constraints and reduce delivery timelines for both power generation and data center projects.
U.S. electrical systems have struggled to keep pace with the rapidly growing power needs of new technologies like Generative AI. This growth threatens to stress the country's increasingly vulnerable power grid.
Google will be a main customer for the clean energy produced by Intersect Power's new facilities and will open new data centers that use this clean energy right away, the company said.
"This means the Google data center would come online alongside its own clean power, bringing new generation capacity to the grid to meet our load, reduce time to operation and improve grid reliability," Google said in a statement.
The first phase of the first co-located project is expected to be operational by 2026 and fully complete in 2027.
Founded in 2016, Intersect Power provides scalable low-carbon solutions to energy customers and is a portfolio company of TPG Rise Climate, which is the climate-focused fund of private equity firm TPG.