(Bloomberg) – Meta Platforms Inc. is trying to break into the wholesale power trading business to better manage the large-scale power needs of data centers.
The Facebook-owned company filed an application with US regulators this week and is seeking permission to do so. Meta representatives said that joining the energy market is a natural next step as they aim to operate electricity using clean energy.
Power purchases are becoming an increasingly urgent issue for technology companies such as Meta, Microsoft Corp. and Google at Alphabet Inc. They are all racing to develop more advanced artificial intelligence systems and famous tools that are resource-intensive. According to submissions to US regulators, Amazon.com Inc., Google and Microsoft are already active power traders.
Large tech companies consume a lot of electricity, but there are also electricity contracts that can be flipped over and sold when prices are high.
“There's an opportunity to sell electricity to the wholesale market and make a little extra money from it,” said Pavel Morkanov, analyst at Raymond James.
Additionally, tech companies with batteries or on-site generators in their data centers can sell electricity from people to the grid when prices rise sharply, said Andy DeVies, utility and power analyst at Credits Inc.
The power demand from the data centers used to build and run AI models is set in a quadruple layer over 10 years, based on forecasts from Bloombergnef. At the same time, electricity prices are rising amid this surge in electricity demand. In fact, the amount of payments the generators acquire in some US markets reached a record at an auction held this year by the country's largest grid, ranging from Washington to Chicago.
Demand is so robust that some tech companies that touted their climate targets consider natural gas to be an important source of powering data centers. For example, last month, Louisiana regulators approved a plan for utility Entergy Corp., which would build three natural gas plants to drive Meta's data centers.
Meta's application to the Federal Energy Regulation Commission seeks permission to “sell energy, capacity and certain auxiliary services.” However, in the United States, they did not identify where they wanted to exchange power. The company will need to apply for membership to trade in any of seven competitive electricity markets, including Texas Grid, which encompasses Louisiana data centers and mid-condition independent systems operators.
We submitted a request through our subsidiary, ATEM Energy LLC. Meta has asked to approve the application by November 16th.
– Support from Ruth Riao and Mark Chediak.
(Update where electricity prices rose in the 7th paragraph)
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