TITLE: Alphabet to buy Intersect Power for $4.75 billion to ease data center energy constraints

Alphabet Acquires Intersect Power to Secure Clean Energy for Data Centers

Alphabet Inc., the parent company of Google, has agreed to acquire Intersect Power, a developer specializing in data centers and clean energy infrastructure, for $4.75 billion in cash along with the assumption of the company's debt. The transaction, announced on December 22, 2025, is designed to enable Alphabet to expand its data center capacity independently of strained local utility grids, which have struggled to meet the surging energy needs of artificial intelligence operations.

Securing reliable power sources has emerged as a pivotal challenge for tech giants investing heavily in AI. Training large-scale AI models requires vast computational resources housed in data centers, which consume enormous amounts of electricity. Utilities in key regions have faced delays and capacity shortages, prompting companies like Alphabet to pursue alternative energy strategies.

The acquisition allows Alphabet to integrate Intersect Power's upcoming development projects directly into its operations. These projects focus on creating 'data parks'—specialized industrial sites positioned adjacent to renewable energy sources such as wind farms, solar arrays and battery storage systems. This co-location minimizes transmission losses and ensures a steady, low-carbon power supply tailored to data center demands.

Background on the Partnership

This deal represents an escalation of an existing relationship between Alphabet and Intersect Power. In December 2024, Google and the investment firm TPG Rise Climate co-led an $800 million strategic funding round in Intersect Power, in which Alphabet acquired a minority stake. That investment established a framework for collaborative growth, with ambitions to deploy up to $20 billion in total capital by 2030.

Under the prior agreement, Alphabet committed to utilizing Intersect's energy developments to power its global data center network. The funding round highlighted the growing intersection of clean energy and AI infrastructure, as tech firms seek to align their expansion with sustainability goals while addressing immediate power shortages.

Intersect Power, founded in 2016, has positioned itself as a key player in the clean energy sector by developing integrated solutions for high-demand industries. Its portfolio includes utility-scale renewable projects and innovative storage technologies, making it an attractive target for companies navigating the energy transition.

Details of the Transaction

The acquisition encompasses Intersect Power's pipeline of future projects but excludes its current operational assets. Those existing facilities will be divested to other investors and operated as an independent entity, allowing Alphabet to focus on greenfield developments without legacy encumbrances.

Alphabet anticipates that the new data parks will begin coming online in late 2026, with full completion targeted for 2027. These sites are engineered for scalability, with Google as the anchor tenant. However, their design as multi-tenant industrial parks enables the hosting of AI hardware from other companies alongside Alphabet's systems, potentially fostering a shared ecosystem for compute-intensive workloads.

The deal is subject to customary regulatory approvals and is expected to close in the first half of 2026. Financial terms beyond the $4.75 billion cash payment and debt assumption were not disclosed. Alphabet's move underscores a broader industry trend, where hyperscalers are vertically integrating energy production to mitigate risks from grid congestion and regulatory hurdles.

Implications for AI and Energy Sectors

As AI adoption accelerates, energy consumption by data centers is projected to rival that of small countries. The International Energy Agency estimates that global data center electricity use could double by 2026, driven largely by AI training and inference tasks. Alphabet, which operates some of the world's largest data center networks, has publicly emphasized the need for carbon-free energy to power its AI initiatives, including models like Gemini.

By acquiring Intersect Power, Alphabet gains greater control over its energy supply chain, reducing dependence on third-party utilities that have imposed moratoriums or delays on new connections in high-growth areas like Virginia and Texas. This strategy aligns with commitments under the Climate Accord for Data Centers, a voluntary initiative signed by major tech firms to achieve 24/7 carbon-free energy by 2030.

The transaction also signals increasing M&A activity in the clean energy space. Similar deals include Microsoft's investments in nuclear and renewable projects, and Amazon's acquisitions of wind and solar farms. For Intersect Power, the sale provides capital to accelerate its ambitious pipeline while leveraging Alphabet's technical expertise to innovate in energy-efficient data infrastructure.

Industry analysts view the acquisition as a proactive step amid geopolitical and environmental pressures. Rising electricity costs, coupled with policy shifts—such as potential changes under the incoming U.S. administration—could further complicate grid access. Alphabet's approach may set a precedent for how tech leaders balance rapid AI scaling with sustainable energy procurement.

In related developments, the clean energy sector faces headwinds from policy reversals. The Trump administration recently halted approvals for 6 gigawatts of offshore wind leases, impacting broader renewable deployment. Meanwhile, AI tools continue to evolve, with recent launches like ChatGPT's year-end review features highlighting the consumer-facing applications driving underlying infrastructure demands.