Microsoft announced Thursday a partnership to build 500 megawatts of community-scale solar power across the country as the energy demands for AI are making it harder for tech companies to meet ambitious clean-energy and climate targets.
Tech sector investments in clean energy are becoming common as companies seek more wind, solar and other carbon-free electricity for power-hungry data centers while still working toward corporate net-zero emission pledges. But Microsoft‘s latest announcement stands out for its focus on putting solar in places where it can benefit communities in need.
“Those community benefits include energy cost savings, workforce training and jobs,” Danielle Decatur, director of environmental justice at Microsoft, told Newsweek.
The five-year partnership with renewable energy company Pivot Energy calls for about 150 mid-sized, ground-mounted solar projects in as many as 100 communities in 20 different states. Decatur said many of those host communities will be places where people with lower incomes pay a disproportionate amount for electricity and home heating and cooling. Community solar offers a more affordable alternative.
“There’s a significant portion of the population in the U.S. that spends up to 10 percent of their income on their energy bill,” Decatur said. “These projects are going to help some families be able to buy groceries and school supplies for their kids.”
Microsoft will purchase renewable energy credits, or RECs, from the solar projects for a 20-year term. RECs are certificates of the environmental good for a kilowatt hour of renewable energy and allow a company to track its progress toward its emissions reduction goals. Pivot said in a statement that the agreement is the company’s largest REC agreement.
Pivot said the projects will also allow it to increase the diversity among its subcontractors and use workforce development organizations to train and hire local workers.
The first solar projects are expected to be complete by the end of the year, with the others developed through 2029. Over the course of the 20-year purchase agreement, Microsoft said, the projects will generate enough electricity to meet the power needs of a small city of 90,000 average homes. The carbon dioxide emissions avoided roughly equal those from 165,000 gas-powered cars a year.
Microsoft will need that clean power and much more if it is to stay on track for its ambitious climate goals.
Microsoft appears on Newsweek‘s list of America’s Most Responsible Companies, where it ranks fifth in the software and telecommunications sector on its environment, sustainability and governance measures. The company aims to purchase enough clean energy by next year to account for 100 percent of the energy used in its operations.
In 2020, Microsoft set a goal to be carbon negative by the end of the decade—that is, reducing more greenhouse gas emissions than it produces by both cutting climate pollution and investing in ways to pull carbon dioxide from the atmosphere. By mid-century, the company said, it plans to remove as much CO2 from the atmosphere as it has directly emitted since it was founded in 1975.
However, the company’s most recent sustainability report released in May showed aggregate emissions for 2023 are up 29 percent compared to 2020. The company said that the jump in climate pollution is largely due to the expansion of data centers that power generative AI.
In an interview with Bloomberg in May, Microsoft President Brad Smith said the company had launched what he called its “carbon moonshot” in 2020 before the explosion in AI.
“In many ways the moon is five times as far away as it was in 2020,” Smith said in the interview, a reference to the many-fold increase in energy needs for AI.
Energy analysts at the Electric Power Research Institute projected in a report this year that the electricity demand for data centers could double by the end of this decade, consuming as much as 9 percent of total U.S. electricity production.
Decatur said Microsoft is still “tracking toward” its renewable energy goals, and the community solar developments will play a role in that.
“This agreement will be one of multiple,” she said, “that will help us reach our goals and match our energy consumption.”
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