Google's $4.75B Intersect Power Acquisition: From PPA Buyer to Energy Infrastructure Owner

Alphabet announced the acquisition of Intersect Power for $4.75 billion in cash plus assumption of debt on December 22, 2025.¹ The deal represents the first instance of a major technology company directly acquiring a renewable energy developer rather than purchasing power through long-term agreements.² Google expects to close the transaction in the first half of 2026, bringing multiple gigawatts of energy and data center projects under direct ownership.³

TL;DR

Google acquired Intersect Power for $4.75 billion, gaining control of $15 billion in operating or under-construction infrastructure including 10.8GW of clean energy capacity expected by late 2028. The deal shifts Google from power purchaser to energy infrastructure owner, enabling "energy parks" that co-locate hyperscale data centers with generation and battery storage. The acquisition addresses grid interconnection delays averaging five years in some markets. Google's 2026 capital expenditure guidance of $91-93 billion and plans for "significant increases" in 2026 underscore the scale of infrastructure investment driving vertical integration in the tech sector.

Why Google Bought an Energy Company

The fundamental challenge facing AI infrastructure has shifted from computing to power. Google's 2025 capital expenditure guidance reached $91-93 billion, up from initial estimates of $75 billion.⁴ Executives confirmed plans for "significant increases" in 2026 as the company maintains investment in AI infrastructure to meet customer demand.⁵

The traditional approach of signing power purchase agreements no longer delivers power fast enough. Caroline Golin, Google's former global head of energy, explained the logic: "Five years ago [vertical integration] didn't make sense... now it does, because there is no way to procure the option on power in this country unless you own it."⁶

Grid interconnection queues have ballooned from less than two years average wait time in 2008 to nearly five years today.⁷ Some California projects face delays exceeding nine years.⁸ Only 20% of projects requesting interconnection between 2000 and 2018 ever reached commercial operation.⁹

The Intersect acquisition allows Google to bypass these constraints by co-locating generation with data center load, reducing transmission infrastructure requirements and speeding time-to-power.

What Google Acquired

Portfolio Overview

Intersect Power owns an overall portfolio valued at $15 billion in operating or under-construction infrastructure.¹⁰ The company expects 10.8GW of clean energy capacity to be operating or in construction by late 2028.¹¹

The acquisition includes:

• Projects under construction in Texas and California
• An in-development Texas solar and wind project with approximately 3.6GW of solar and wind capacity
• Battery energy storage systems with 3.1 gigawatt-hours of capacity¹²

What Remains Independent

Intersect's existing operating assets in Texas and its operating and in-development assets in California remain excluded from the acquisition.¹³ Those assets continue operating as an independent company supported by existing investors TPG Rise Climate, Climate Adaptive Infrastructure, and Greenbelt Capital Partners.¹⁴

Leadership Continuity

Intersect will operate as an independent subsidiary under the Intersect brand, led by founder and chief executive officer Sheldon Kimber.¹⁵ The operational independence preserves the development expertise that made Intersect attractive while integrating the company into Google's capital and strategic planning capabilities.

The Energy Parks Model

Co-Location Strategy

The core innovation behind Google and Intersect's collaboration is the development of energy parks.¹⁶ These large-scale, co-located renewable energy facilities serve the dual purpose of powering data centers and contributing to the broader grid.¹⁷

Energy parks function as large microgrids.¹⁸ Intersect designs each project as a self-contained system with solar panels, batteries, and generators sitting on site with the data center.¹⁹ In practice, an Intersect site relies on solar generation 50-70% of the year, with gas turbines providing backup during cloudy conditions or nighttime.²⁰

Haskell County Example

One concrete example of the co-location strategy is Google's project in Haskell County, Texas.²¹ Google selected the location for its abundant wind and solar resources. Adjacent to the new data center campus, Intersect developed the Quantum Energy Park: approximately 840MW of solar farms plus 1.3GWh of battery storage, co-sited with flexible gas generation.²²

The first co-located clean energy project began financing and expects to be operational in 2026, with full completion by 2027.²³

Grid Impact Benefits

The energy parks approach delivers multiple benefits:

Speed: Solar-plus-storage systems can become operational in months once permitted, compared to years for grid-tied projects.²⁴ On-site generation bypasses the interconnection queue bottleneck that delays traditional data center power strategies.

Reliability: By co-locating load with high capacity factor clean electricity and battery storage, data centers achieve high percentages of renewable energy while maintaining consistent power availability.²⁵

Grid Relief: Reducing transmission distance between generation and load decreases strain on the wider grid infrastructure.²⁶ The energy parks can serve large data center loads and provide grid services.

Regulatory Challenges

Energy parks face uncertainty around tariffs for co-located load.²⁷ The lack of standard rules and procedures for integrating co-located generation means each configuration must go through what Intersect Power described in FERC filings as "a laborious, unpredictable, semi-discretionary process to interconnect."²⁸

FERC Order 2023, issued in mid-2023 and affirmed in 2024, replaced the serial interconnection queue with a "first-ready, first-served" cluster model.²⁹ However, the regulatory framework for co-located generation-load facilities continues evolving.

The Strategic Shift from PPAs to Ownership

Google's PPA History

Google pioneered corporate renewable energy purchasing. Since 2010, the company has signed over 170 agreements to purchase more than 22GW of clean energy worldwide and invested over $3.7 billion in clean energy projects and partnerships.³⁰

The PPA strategy delivered clean energy certificates at scale but depended on grid availability and third-party development timelines. As AI infrastructure demands accelerated beyond what traditional contracting could provide, Google's approach evolved.

Recent PPA Activity

Google continues executing PPAs alongside the acquisition strategy:

• Nearly 1.2GW of carbon-free energy from Clearway Energy Group through long-term agreements, delivering clean electricity from new wind and solar projects in Missouri, Texas, and West Virginia³¹
• A 15-year PPA with TotalEnergies for 1.5 TWh of certified renewable electricity from the Montpelier solar farm in Ohio³²

Why Ownership Changes the Equation

The Intersect acquisition represents a paradigm shift from purchaser to developer.³³ Rather than offtaking energy at wholesale rates, Google will directly own and control generation pipeline optimized for its AI data centers.³⁴

The energy-plus-renewable-energy-credits strategy that hyperscalers followed for a decade no longer addresses current constraints. Golin noted: "Any developer going to the market trying to sell 30-year PPAs that look like the same thing we were buying in 2021 have sort of missed the alarm clock."³⁵

Owning generation provides several advantages:

Timeline Control: Google can prioritize projects aligned with data center construction schedules rather than waiting for third-party development cycles.

Location Optimization: Energy parks can be developed specifically where Google plans data center campuses, eliminating geographic mismatches between generation and load.

Cost Structure: Direct ownership removes developer margins and provides long-term cost predictability based on capital investment rather than market-rate power pricing.

How Competitors Approach Energy Strategy

Microsoft: Partnerships and Grid Investment

Microsoft emphasizes diverse energy approaches without acquiring generation companies. The company's agreement to restart the Three Mile Island nuclear reactor in Pennsylvania represents a 20-year, $16 billion power purchase agreement rather than asset ownership.³⁶

By mid-January 2026, Microsoft President Brad Smith confirmed a "pay-your-own-way" model, agreeing to utility rates high enough to fund $15 billion in new infrastructure and grid upgrades.³⁷ Microsoft accepts higher power costs in exchange for accelerated interconnection rather than building generation assets directly.

Amazon: Nuclear and Direct Investment

Amazon acquired a nuclear-powered data center and associated energy infrastructure from Talen Energy, gaining the closest thing to vertical integration outside of Google's Intersect deal.³⁸ The company also invested directly in X-energy to support small modular reactor development.³⁹

Amazon announced plans for 12 SMR reactors producing nearly 1GW in partnership with Energy Northwest.⁴⁰ The strategy combines existing nuclear assets with long-term bets on next-generation technology.

Meta: Nuclear Agreements

Meta secured 6.6GW of nuclear power through 20-year agreements with Vistra, TerraPower, and Oklo.⁴¹ The approach relies on power purchase agreements and development funding rather than asset ownership, contrasting with Google's acquisition strategy.

Capital Expenditure Context

Google's Spending Trajectory

Google has raised 2025 capital expenditure guidance twice, jumping from an initial $75 billion to the current $91-93 billion range.⁴² Most spending flows directly into data centers and specialized chips for AI model training and inference.⁴³

Despite rising investment, Google remains in what finance chief Anat Ashkenazi called a "tight demand-supply environment" expected to continue through Q4 and 2026.⁴⁴

Industry-Wide Spending

The four largest hyperscalers are on track to invest approximately $400 billion into AI initiatives in 2025.⁴⁵ Combined capital expenditure across Meta, Alphabet, Microsoft, and Amazon is expected to approach $600 billion in 2026, up roughly 36% year-over-year.⁴⁶

The Intersect acquisition represents a minor portion of Google's overall capital deployment but addresses a constraint that affects the productivity of all other infrastructure investment. Without power, data centers remain empty buildings.

Google Cloud Demand

Google Cloud has a $155 billion backlog supporting the infrastructure investment.⁴⁷ Recent major contracts include a $10 billion cloud deal from Meta spanning six years and Anthropic's agreement for access to up to 1 million Google TPUs.⁴⁸

The demand signals support continued capital expenditure acceleration. Energy infrastructure acquisition ensures Google can deploy computing capacity to meet that demand.

Grid Interconnection Crisis

The Scale of Delays

Over 2,000GW of projects sit in interconnection queues across ISOs and RTOs, with delays stretching from three to seven years in some markets.⁴⁹ The average queue time has ballooned from less than two years in 2008 to nearly five years today.⁵⁰

PJM, specifically its Northern Virginia corridor, has become the epicenter of grid congestion due to unprecedented AI data center demand.⁵¹ Unlike previous bottlenecks in MISO and ERCOT driven by integrating remote renewable energy, PJM's challenge stems from massive, localized electricity consumption overwhelming existing infrastructure.⁵²

Regional Variations

Texas (ERCOT): CenterPoint Energy reported a 700% increase in large load interconnection requests, growing from 1GW to 8GW between late 2023 and late 2024.⁵³

MISO: Over 170GW of solar, wind, and storage await interconnection, with many projects facing delays exceeding four years.⁵⁴

Northern Virginia: Developers face seven-year delays in the most congested market.⁵⁵

Solutions Underway

PJM Interconnection approved a $6.7 billion initiative in February 2025 to build a new 765-kV transmission backbone.⁵⁶ The project responds directly to the demand shock in Northern Virginia.

Regional grid operators processed 33% more interconnection agreements in 2024 compared to the previous year.⁵⁷ A 9% decline in new project entries and 51% increase in withdrawals of non-viable projects helped reduce queue backlogs.⁵⁸

However, these improvements cannot match the pace of AI infrastructure demand. An estimated 25-33% of new data center demand through 2030 is expected to come from on-site generation.⁵⁹ Google's Intersect acquisition positions the company to capture that self-generation opportunity.

Implications for the Energy Industry

Developer Positioning

The Intersect deal signals that renewable developers may face a choice: continue competing to sell PPAs in a crowded market or position for acquisition by hyperscalers seeking vertical integration.

Google's former energy head declared that developers "going to the market trying to sell 30-year PPAs" are pursuing an outdated strategy.⁶⁰ If vertical integration proves advantageous in cost or speed, other tech companies may pursue similar acquisitions.

Utility Relationships

Traditional utility relationships are evolving. Microsoft's "pay-your-own-way" approach accepts higher rates in exchange for priority interconnection.⁶¹ A "Bring Your Own Generation" mandate from federal regulators requires new large-scale data centers to either build or directly fund their own power generation assets.⁶²

Independent power producers may need to pivot toward becoming construction partners for tech giants, shifting from selling power to building and managing private energy assets.⁶³ Strategic partnerships rather than simple power purchase agreements are becoming the norm.

Investment Patterns

The Intersect acquisition establishes a valuation benchmark for clean energy developers with data center-adjacent portfolios. The $4.75 billion price plus debt assumption for a $15 billion portfolio suggests premium valuations for developers with proven co-location capabilities.

Venture and private equity investors may prioritize energy developers with existing hyperscaler relationships, recognizing the potential for acquisition exits.

Key Takeaways

For Infrastructure Planners:

• Co-location of generation and load bypasses multi-year interconnection queue delays
• Energy parks with on-site solar, storage, and backup generation can deliver power in months rather than years
• The 50-70% renewable fraction achievable with current technology balances sustainability goals with reliability requirements

For Operations Teams:

• Self-contained microgrid designs reduce dependency on grid stability
• Flexible gas backup addresses intermittency without requiring utility-scale transmission
• Battery storage provides bridge power during generation transitions

For Strategic Leaders:

• Vertical integration in energy reflects structural shifts in power procurement economics
• The Intersect acquisition establishes a template competitors may follow
• Asset ownership provides timeline control, location optimization, and long-term cost predictability that PPAs cannot match

The energy constraint on AI infrastructure has become severe enough that Google chose to become an energy infrastructure company. The Intersect acquisition addresses not just power supply but power timing, ensuring generation capacity aligns with data center construction schedules.

For organizations evaluating power strategies for data center development, Introl provides expertise in infrastructure planning and deployment across traditional grid-connected and co-located generation configurations.

References