In a bold stride toward sustainable energy, Google has inked a deal to purchase approximately $1 billion worth of iron-air batteries from Form Energy, a U.S. startup specializing in long-duration energy storage. The massive investment aligns with the tech giant’s goals to enhance the energy reliability of its upcoming Minnesota data center.
Upon the announcement, Google (GOOGL) stock experienced a minor dip, falling by 1.7% in early trading, indicative of investor apprehensions regarding the hefty upfront costs associated with the advanced battery technology.
Form Energy’s innovative batteries can provide a staggering 300 megawatts of output for up to 100 hours, a capability that is expected to significantly bolster the reliability of renewable energy sources, especially from wind and solar. This technology will play a crucial role in stabilizing energy supply, enabling a consistent flow rather than the intermittent availability typical of renewable resources.
Mateo Jaramillo, CEO of Form Energy, has shared that the startup is also in the midst of raising a $500 million funding round, with plans for an initial public offering slated for next year. With a total funding pool of $1.4 billion, Form Energy is firmly positioning itself within the burgeoning long-duration energy storage market.
For Form Energy, securing Google as its first major customer is more than a financial boon; it represents a significant endorsement that could expedite the expansion of their manufacturing capabilities at their West Virginia facility. The development of long-duration iron-air batteries is still in its infancy in the commercial sector, and having a client of Google’s magnitude instills confidence in the technology’s viability.
This agreement, according to Jaramillo, serves as a catalyst to advance their manufacturing capacity and validate the commercial feasibility of long-duration storage solutions.
From Google’s perspective, this investment guarantees that its Minnesota facility will benefit from a stable, carbon-free energy source, sidestepping reliance on fossil-fuel backup generators that plagued traditional data centers.
A pivotal factor behind this ambitious investment is the unique regulatory framework adopted in Minnesota, known as the Clean Energy Accelerator Charge (CEAC). This framework permits large energy consumers like Google to finance up to 1.9 gigawatts of clean energy and enhancements to grid infrastructure without imposing increased rates on local utility customers.
Xcel Energy, the local utility, can seamlessly incorporate solutions like Form Energy’s batteries without the challenges of conventional regulatory costs, paving the way for a more sustainable energy model.
This is not Google’s first venture into utilizing such financial structures; the company has previously leveraged similar tariffs to support renewable geothermal projects in Nevada, displaying an replicable model for progressive clean energy investment.
The Google-Form Energy partnership signals a broader trend in the tech industry, addressing the escalating energy demands fostered by artificial intelligence and other compute-intensive tasks. As many tech firms have historically leaned on fossil-fuel energy to accommodate their data center needs, Google is stepping up to lead the charge in adopting innovative storage solutions that support a transition to around-the-clock carbon-free operations.
Iron-air batteries, with their capacity for multi-day discharges, provide the essential long-lasting energy storage needed to guarantee continuous renewable energy supply. Through this deal, Google not only improves operational reliability but also diminishes the carbon footprint associated with high-energy-demand data centers, setting a standard for other companies aspiring to achieve similar sustainability goals.
