Artificial Intelligence (AI) is significantly changing the way power and energy markets operate, and even large oil companies like Exxon Mobil are getting involved. Recently, Exxon announced plans to build a power plant specifically designed to supply electricity to data centers. This move highlights the growing demand for electricity that technology companies anticipate will be necessary over the next ten years. A recent estimate suggests that by 2027, almost half of the new data centers for AI may struggle to get enough power.
Currently, Exxon already runs power plants to support its own operations, but this new project will be its first venture into providing power for other businesses. The new power plant will operate using natural gas and is expected to produce more than 1.5 gigawatts of electricity, which is a substantial amount.
In an interesting development, Exxon has stated that it plans to capture and store over 90% of the carbon dioxide emissions generated by this new plant. This is a significant commitment, as capturing carbon emissions is a critical step in addressing climate change.
However, Exxon has chosen not to connect this power plant to the traditional power grid. This decision is strategic, as many new power plants have faced delays due to a backlog in connecting to the grid. In a recent strategy document, Exxon described the new facility as providing “reliable, fully-islanded power with no reliance on grid infrastructure.” The company has not disclosed the exact location of the planned power plant and did not respond to inquiries for more information.
Exxon expects to complete the facility within the next five years, which is a relatively quick timeline compared to many nuclear power plants that are being developed, most of which are not expected to start operating until the early 2030s.
However, Exxon is facing tough competition from renewable energy sources, which are becoming easier and cheaper to implement. For instance, Google has announced a massive $20 billion investment in renewable energy, with plans to start contributing electricity to the grid by 2026. Similarly, Microsoft is investing in a $5 billion renewable energy project that aims to produce 9 gigawatts of power, with its first solar project expected to begin operating in the next six to nine months.
Exxon’s plans are complicated by the fact that capturing and storing carbon emissions (known as Carbon Capture and Storage, or CCS) can be very expensive. Currently, there are only a few power plants around the world that successfully capture some of their carbon emissions, and none of them use natural gas. However, recent legislation, such as the Inflation Reduction Act, offers tax credits for carbon capture efforts, which could help offset some of these costs.
Despite these incentives, the technology for capturing carbon is still being refined. While some facilities have met their carbon capture goals, others have not performed as well. For example, a CCS facility in Canada aimed to capture 90% of the carbon emissions from a small coal plant but has only managed to capture just under 60% after nearly ten years of operation. This indicates that while the goals are ambitious, there are still challenges to overcome in effectively implementing carbon capture technology on a large scale.
