Meta Pushes Into Power Trading as AI Sends Demand Soaring
(Bloomberg) -- Meta Platforms Inc. is moving to break into the wholesale power-trading business to better manage the massive electricity needs of its data centers.
The company, which owns Facebook, filed an application with US regulators this week seeking authorization to do so. A Meta representative said it was a natural next step to participate in energy markets as it looks to power operations with clean energy.
Buying electricity has become an increasingly urgent challenge for technology companies including Meta, Microsoft Corp. and Alphabet Inc.’s Google. They’re all racing to develop more advanced artificial intelligence systems and tools that are notoriously resource-intensive. Amazon.com Inc., Google and Microsoft are already active power traders, according to filings with US regulators.
While big tech companies consume huge amounts of electricity, they also have contracts for power that they can flip around and sell when prices are high.
“There will be opportunities to sell electricity into the wholesale markets and make a little extra money doing that,” said Pavel Molchanov, an analyst at Raymond James.
Plus, tech companies that have batteries or on-site generators at data centers can sell power from those back to the grid when prices spike, said Andy DeVries, a utilities and power analyst at CreditSights Inc.
Power demand from data centers used to build and run AI models is set to quadruple in 10 years, based on projections from BloombergNEF. At the same time, power prices are rising amid this surge in electric demand. In fact, capacity payments — which generators get in some US markets — hit a record in an auction held this year by the country’s biggest grid, which stretches from Washington to Chicago.
The demand is so robust that some tech firms that touted their climate goals are now considering natural gas a key source to help power their data centers. Last month, for instance, Louisiana regulators approved utility Entergy Corp.’s plan to build three natural gas plants to power Meta’s data center there.
Meta’s application to the Federal Energy Regulatory Commission seeks authorization “to sell energy, capacity, and certain ancillary services.” It didn’t identify, however, where in the US it would seek to trade power. The company would be required to file for membership in order to trade in one of seven competitive power markets, such as the Texas grid or the Midcontinent Independent System Operator, which encompasses the Louisiana data center.
It filed the request through a subsidiary, Atem Energy LLC, formed to act as a power marketer. Meta asked for its application to be approved by Nov. 16.
(Updates with rising power prices in the 7th paragraph)
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