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From Fusion to Geothermal, Tech’s Clean Energy Bets Are Multiplying

Nuclear fission is in the spotlight, but it’s not the only clean energy source cloud giants are banking on.

Nuclear isn’t the only source of carbon-free power that has energized the tech industry.

For years, solar and wind have been mainstays for tech companies looking to reduce the greenhouse gases emitted by their data centers and other operations. The tech industry is also forming partnerships to build power plants that use new technologies to tap geothermal energy, some of which are already operational.

The most speculative, and promising, technology getting funding is nuclear fusion—a method of releasing energy by mashing atom nuclei together. Traditional nuclear reactors create energy by splitting atoms apart. Here are the carbon-free power sources garnering the most interest from tech companies.

One of the most exciting potential sources of consistent, carbon-free electricity, fusion mimics the inner workings of stars and has many tantalizing benefits. The radioactive waste that fusion creates isn’t nearly as dangerous as that from fission, and a Chernobyl-like meltdown through a runaway chain reaction isn’t possible with fusion reactors, its proponents say.

Still, creating a fusion reactor has been a highly elusive goal, despite decades and decades of effort. But an exciting breakthrough occurred in 2022 when scientists at Lawrence Livermore National Laboratory in California said they had created a fusion reaction that generated more energy than it took to cause the reaction in the first place.

The prospect of almost limitless clean electricity, without the safety risks of nuclear fission, has prompted tech investors and cloud computing companies to open their wallets. OpenAI CEO Sam Altman is the chair of one fusion startup, Helion, for which he personally led a $500 million funding round in 2021. Last month, Helion said it had raised another $425 million from Lightspeed Venture Partners, SoftBank Vision Fund 2 and others, bringing its post-money valuation to over $5.4 billion and total funding raised to over $1 billion. Microsoft has signed a power purchase agreement with Helion to receive electricity from a fusion plant starting in 2028.

Amazon chair Jeff Bezos, meanwhile, is among the backers of a Canadian fusion startup, General Fusion, which had raised over $300 million as of last August.

Human civilization has relied on the Earth’s heat for energy for thousands of years, but it’s only in widespread use in countries like Iceland, where 66% of the nation’s heating and electricity comes from underground geothermal reservoirs. In the U.S., where less than 1% of the nation’s electricity comes from geothermal sources, most plants are concentrated in Hawaii and Western states like California and Utah that have geothermal energy resources such as geysers and volcanoes.

A new category of enhanced geothermal systems is making it easier to tap into the Earth’s heat even in areas with less surface-level geologic activity. Borrowing from the oil and gas industry’s fracking techniques, the method involves injecting water below the Earth’s surface to create steam that then drives turbines, producing carbon-free, around-the-clock electricity (commonly referred to as baseload power).

The technology has started nabbing more attention from big tech companies who need to power data centers and other operations. Google, for example, has partnered with an enhanced geothermal startup, Fervo, that has an operational plant in northern Nevada, which is supplying power through the grid to Google data centers outside Las Vegas and Reno, Nev.

Meta Platforms, meanwhile, announced a partnership last August with Sage Geosystems to create a geothermal power plant that is expected to supply electricity to Meta’s data centers starting in 2027. A combination of regulatory reforms and enhanced geothermal systems could allow the energy source to supply more than 16% of U.S. electricity generation needs by 2050, according to a 2019 report from the U.S. Department of Energy.

For years, tech companies have been pouring money into wind and solar farms to power their data centers. They are both relatively inexpensive sources of carbon-free energy, and it’s much easier to build such projects quickly compared to far more heavily regulated sources of energy like nuclear power. Amazon alone has invested in more than 40 utility-scale solar and wind projects in the U.S., Australia, Indonesia and other countries, the company says.

The chief downsides of solar and wind power is that they’re both intermittent sources that depend on how brightly the sun is shining and how forcefully the wind is blowing. Utility-scale solar and wind plants can only run for six and nine hours a day on average respectively, according to a report from Goldman Sachs. They also tend to have much larger physical footprints than nuclear and natural gas plants, which means they’re typically in remote locations. That can increase transmission costs.

Batteries can help solve the intermittency problems of solar and wind, though they’re not cheap. The costs of solar or wind plus battery storage can run around $87 per megawatt hour compared to $77 for an onsite nuclear generator, Goldman estimates. To reduce the transmission costs of solar and wind, some tech companies, including Google, are looking at colocating their data centers next to those plants.

With battery storage, solar and wind could serve about 80% of data centers’ electricity needs, but they will still need supplemental sources of baseload power, such as nuclear or gas, Goldman Sachs says.