Overview
Google just spent $4.75 billion to buy a power company. Not to invest in clean energy or offset emissions—to literally own the power plants feeding its AI data centers. Amazon bought a nuclear-powered campus in Pennsylvania. Microsoft restarted Three Mile Island. Meta put out bids for 4 gigawatts of new nuclear capacity. Tech giants aren't buying electricity anymore. They're building the grid themselves.
The reason is stark: AI is hitting a wall, and it's made of electrons. Data centers will consume 426 terawatt-hours by 2030—more than double today's use and equivalent to adding another California to the grid. Utility companies can't expand transmission fast enough. Interconnection queues stretch five years. So tech companies are doing what Carnegie did with iron ore and Rockefeller did with pipelines: vertically integrating. They're bypassing the grid entirely, co-locating power plants next to server farms behind a single fence. The question isn't whether AI will transform computing. It's whether the rush to power it will reshape American infrastructure—and who controls the electricity.
Key Indicators
People Involved
Organizations Involved
Houston-based developer pioneering co-located data center and power generation infrastructure.
Google's parent company, now vertical integrating into power generation to fuel AI data centers.
Independent agency overseeing interstate electricity transmission and wholesale power markets.
Amazon's cloud division, targeting 5 GW of small modular reactor capacity by 2039.
Cloud and AI provider securing 837 MW of nuclear power to fuel data centers.
Timeline
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Alphabet Acquires Intersect Power for $4.75 Billion
AcquisitionGoogle parent company announces definitive agreement to buy Intersect, securing multiple gigawatts of co-located generation and data center projects. Deal includes Haskell County, Texas facility. Intersect to operate independently under CEO Sheldon Kimber. Closing expected H1 2026.
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Google Announces Project Suncatcher Orbital Data Centers
InnovationSundar Pichai reveals plans for solar-powered data centers in Earth orbit, launching pilot satellites in 2027. Signals tech industry exploring every avenue—terrestrial and extraterrestrial—to solve AI's power crisis.
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Google and TPG Lead $800M Investment in Intersect Power
InvestmentStrategic partnership announced targeting gigawatts of co-located data center and renewable generation capacity. Google becomes anchor tenant for Intersect's power-first development model, catalyzing $20B infrastructure investment by 2030.
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FERC Rejects Amazon's Expanded Nuclear Co-Location Deal
RegulatoryFederal regulators reject PJM request to expand Amazon's Susquehanna nuclear plant power from 300 MW to 480 MW. 2-1 vote cites concerns about cost-shifting to ratepayers and inadequate grid protection. Industry pivots strategy.
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Google and Amazon Announce Major Nuclear Commitments
Nuclear PartnershipGoogle orders 500 MW across 6-7 Kairos Power molten salt reactors, first corporate SMR purchase. Amazon invests $500M in X-energy, commits to 5 GW capacity by 2039. Nuclear becomes Big Tech's preferred long-term solution.
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Microsoft Signs Deal to Restart Three Mile Island
Nuclear PartnershipConstellation Energy announces 20-year power purchase agreement with Microsoft to restart Unit 1 of Three Mile Island nuclear plant, delivering 837 MW starting 2028. First major tech-nuclear deal signaling industry shift.
Scenarios
Vertical Integration Becomes Industry Standard by 2030
Discussed by: Goldman Sachs Research, Bloomberg Energy, Grid Strategies LLC
Tech companies own or control 15-25% of new U.S. generation capacity by 2035. What began as necessity becomes competitive advantage: companies with captive power deploy AI faster than grid-dependent rivals. Utilities face existential crisis as their largest customers become competitors. Regulators approve standardized behind-the-meter frameworks after initial resistance. Small modular reactors prove commercially viable at scale. Legacy coal and gas plants find new life powering hyperscalers. The grid fragments into two tiers—public utility serving residential and commercial loads, private infrastructure serving industrial AI. Energy becomes as strategic to tech business models as semiconductors.
Regulatory Crackdown Forces Divestiture of Power Assets
Discussed by: Harvard Law School environmental policy researchers, utility industry advocates
Concerns about market power, ratepayer cost-shifting, and grid reliability trigger antitrust scrutiny. Senators Elizabeth Warren and others demand investigations into whether tech giants are unfairly burdening public grids while privatizing generation. FERC tightens co-location rules, imposing strict cost allocation and reliability requirements that make behind-the-meter arrangements economically unattractive. States pass laws requiring data centers to pay full transmission costs regardless of generation ownership. Companies forced to sell power assets or structure them as regulated utilities with public service obligations. The vertical integration wave stalls, and tech returns to traditional power purchase agreements with independent generators.
Grid Modernization Catches Up, Eliminating Need for Private Infrastructure
Discussed by: Energy innovation analysts, transmission developers
Massive federal infrastructure investment—$720 billion through 2030 per Goldman estimates—transforms grid capacity. Streamlined permitting, AI-optimized load balancing, and battery storage expansion eliminate interconnection backlogs. High-voltage DC transmission lines connect renewable-rich regions to data center hubs. Utilities successfully compete for hyperscaler loads by offering competitive pricing and fast deployment. Tech companies abandon costly vertical integration efforts, selling power assets to focus on core computing business. Intersect-type acquisitions prove strategic dead ends as grid constraints that motivated them disappear. Power and computing return to separate industries.
Nuclear Renaissance Fails, Forcing Renewed Fossil Dependence
Discussed by: Nuclear industry skeptics, environmental groups concerned about timelines
Small modular reactors miss deployment targets. Kairos, X-energy, and other vendors hit licensing delays, cost overruns, and technical setbacks. First commercial units slip from 2030 to mid-2030s. Restarting mothballed plants like Three Mile Island proves more expensive than projected. Desperate for reliable baseload, tech companies pivot to natural gas co-generation—cleaner than coal but far from carbon-neutral. Climate commitments collide with AI ambitions. Public backlash grows as data centers drive up emissions after years of decline. Companies face choice: throttle AI growth or abandon sustainability pledges. The energy transition stalls as AI's appetite overwhelms renewable supply.
Historical Context
Standard Oil's Vertical Integration (1870-1911)
1870-1911What Happened
John D. Rockefeller built Standard Oil by controlling every stage of oil production—extraction, refining, transportation, and distribution. He acquired pipelines, railroad cars, and barrel-making plants, eliminating dependence on outside suppliers. By 1880, Standard controlled 90% of U.S. refining capacity through this integrated model.
Outcome
Short term: Massive cost advantages allowed Standard to undercut competitors and dominate markets.
Long term: Antitrust prosecution broke company into 34 pieces in 1911, but vertical integration became industry standard.
Why It's Relevant
Google's Intersect acquisition mirrors Rockefeller's logic: if you can't buy the input reliably, own the supplier. The question is whether regulators will again view such integration as anticompetitive.
Carnegie Steel's Iron Ore Integration (1889-1901)
1889-1901What Happened
Andrew Carnegie bought Minnesota's Mesabi iron ore mines, coal fields, coke ovens, river barges, and railroads to control steelmaking from raw materials to finished rails. By 1900, he owned one-quarter of global steel production through complete vertical integration.
Outcome
Short term: Cost control and supply security allowed Carnegie to dominate the steel industry and underprice rivals.
Long term: Sold to J.P. Morgan for $480 million in 1901, becoming U.S. Steel; integration model persisted for decades.
Why It's Relevant
Tech companies are applying Carnegie's playbook to electricity: own the 'mines' (power plants) because the 'transportation network' (grid) can't deliver at the speed and scale AI demands.
Aluminum Industry Self-Generation (1950s-Present)
1950s-PresentWhat Happened
Aluminum smelting requires massive, continuous electricity—making power the industry's largest cost. Companies like Kaiser built dedicated gas-fired plants on-site. Today, 55% of global aluminum industry power is self-generated, rising to 95% in parts of Asia, because grid dependence introduces cost and reliability risk.
Outcome
Short term: On-site generation became competitive necessity; companies without captive power struggled on cost.
Long term: Vertical integration into power became industry standard; energy access remains strategic constraint.
Why It's Relevant
AI data centers are the new aluminum smelters—energy-intensive operations where power availability determines viability. Intersect acquisition suggests tech is following aluminum's century-old path to self-generation.