Google inks $3 billion hydropower deal, but why? Is it a trend in the making?

In a significant move that solidifies its commitment to clean energy, Google has announced a historic $3 billion deal with Brookfield Asset Management, securing up to 3 gigawatts of hydropower for its energy-hungry data centres. The deal marks one of the largest corporate clean power contracts in the world and is poised to play a significant role in helping Google meet its ambitious sustainability goals. The partnership centres on two hydroelectric plants in Pennsylvania: the Holtwood and Safe Harbor plants, located roughly 75 miles southwest of Philadelphia. These facilities, with a combined capacity of 670 megawatts, will provide power to Google’s data centres for the next 20 years. However, this is just the beginning.

The framework agreement between Google and Brookfield sets the stage for a potential expansion, as Google aims to secure up to 3,000 megawatts of hydropower from Brookfield in the coming years, spanning the Mid-Atlantic, Midwest, and Gulf Coast regions. Google’s move comes amid a broader push by the tech industry to tackle the rapidly growing demand for energy driven by artificial intelligence (AI) and cloud computing.

As part of its clean energy push, Google has already made notable investments in other renewable energy sources, such as geothermal and advanced nuclear power. This latest deal underscores the company’s dedication to a 24/7 clean energy model, where energy consumption from its data centres aligns with the clean power generated at any given time.

Why hydropower?

The decision to turn to hydropower is not random. Google’s data centres, which power billions of online services daily, have long been major consumers of energy, and finding reliable, clean energy sources has become critical. While solar and wind power are popular renewable sources, they come with limitations due to their intermittent nature. Wind and solar energy are dependent on weather conditions, making them less reliable in meeting the constant demand from hyperscale data centres.

Hydropower, in contrast, offers a reliable and continuous source of energy. Unlike wind and solar, hydropower is a dispatchable resource, meaning it can be produced on demand by releasing stored water from reservoirs. This ability to provide consistent, round-the-clock power makes hydropower an ideal energy source for data centres, which require uninterrupted access to electricity.

Hydropower also provides the added benefit of being carbon-free, helping Google advance its sustainability goals. The company has long been committed to sourcing 100 per cent renewable energy for its global operations, and this latest deal with Brookfield will support that effort. As part of the agreement, Google is collaborating with Brookfield to upgrade and relicense its two Pennsylvania plants, ensuring they remain operational for decades to come.

“The collaboration with Brookfield is a significant step forward in ensuring a clean energy supply for our data centres, especially in the PJM region where we operate,” said Amanda Peterson Corio, Google's head of data centre energy, in a statement. “This agreement will help us meet our energy consumption needs while also contributing to our broader sustainability goals.”

An industry-wide shift

Google’s $3 billion deal with Brookfield is part of a broader industry trend among hyperscalers—companies like Amazon, Microsoft, and Meta Platforms—that operate large-scale data centres and consume vast amounts of electricity. As the demand for cloud computing and AI applications continues to surge, these tech giants are facing mounting pressure to secure clean, reliable energy sources.

The increasing reliance on AI, which requires massive amounts of data processing, has exacerbated the need for electricity. A report by the International Energy Agency (IEA) notes that electricity consumption from data centres is growing rapidly, driven by AI applications and other cloud computing needs. This demand has led to a shift in how tech companies approach their energy procurement.

The trend toward hydropower is part of a broader effort to address energy shortages and sustainability concerns. While hydropower has not historically been the focal point for tech companies, it is now gaining attention as a potential solution. Microsoft, for example, has been using hydropower for its data centres for nearly a decade. Other companies, including DPO and Polar, are exploring hydropower for their new data centres, particularly in regions like Washington State and Norway.

However, hydropower faces its own challenges. For one, it is often difficult to find new sites for hydroelectric dams, as most prime locations are already in use. In addition, building new hydro plants can take years, far longer than the typical two to three years required to build new data centres. The limited availability of hydropower resources has led many companies to secure existing plants or work with utilities to upgrade and expand their capacity.

Navigating power challenges

As data centres continue to consume more power, the competition for renewable energy sources is only intensifying. While hydropower is an attractive option, it remains a niche solution that may not be able to meet the growing demand in the long term. Experts suggest that the shift to hydropower may only be a stopgap measure, with other energy sources like natural gas, nuclear, and advanced renewables playing a larger role in the future.

Google’s deal with Brookfield is a significant step, not only for the company but for the entire tech industry. The partnership highlights the growing importance of sustainable energy solutions in powering the next generation of AI and cloud services.