Meta Platforms strikes geothermal energy deal to power US data centres

Facebook owner Meta Platforms has struck a deal to buy geothermal power from Sage Geosystems to supply its US data centres, as it races to build out the infrastructure to support its massive investments in energy-hungry artificial intelligence.

The first phase of the 150-megawatt project should be operational by 2027 and “significantly” expand the use of geothermal power in the United States, the social media company said. The location has yet to be determined, but the companies said it will be east of the Rocky Mountains.

Financial terms of the deal were not disclosed.

Geothermal power is a renewable energy source that uses the Earth’s internal heat to produce electricity and heat water. One-hundred and fifty megawatts is roughly enough electricity to power 38,000 homes.

Meta’s announcement, made as part of a US Department of Energy event on geothermal development, comes as President Joe Biden’s administration is asking big technology companies to invest in new clean power generation to cover their surging electricity demand.

That surge has been driven by the adoption of technologies like generative AI that require large amounts of electricity to power data centres, a development that could complicate Biden’s target of decarbonizing the power sector by 2035 to fight climate change.

Sage, which is based in Houston, is a four-year-old startup developing next-generation technology that it says can be deployed in more locations than traditional geothermal, which requires naturally occurring underground reservoirs of hot water and accounts for 0.4 per cent of US power generation.

The company is backed by oil and gas firms Chesapeake Energy (CHK.O) and Nabors Industries (NBR.N) and venture capital firms Virya and Helium-3 Ventures.

The project for Meta would be Sage’s largest to date by far. The company said it first validated the technology in the field just two years ago.

A Meta spokesperson told Reuters the company expected the Sage Geosystems energy to feed the power grid, rather than directly supplying any specific data center.

Meta has been scrambling to overhaul and build out infrastructure to accommodate its push into generative AI for the last several years, refashioning its data centres to support the types of chips best suited to AI workloads.

That AI push has caused the company’s expenses to spike. Last month, Meta forecast 2024 capital expenditure would come in between $37 billion and $40 billion, while cautioning that infrastructure costs would continue to be a “significant driver” of expense growth in 2025.