Meta Bets on Power Trading to Fuel Its AI Ambitions

Facebook parent company Meta Platforms (META) is no longer just a social media giant. These days, it's also looking to become a power player – literally.

Faced with skyrocketing energy demands from artificial intelligence ("AI") data centers, the $1.5 trillion tech giant is entering the electricity trading business.

The move marks a major shift in how Big Tech sources power. It also highlights the growing tension between digital growth and the physical limits of the U.S. power grid.

While billions of people around the world use AI to write cover letters, create monthly budgets, and teach them Spanish, the exploding demand has shaken up the energy markets, too.

The advanced computing needed to train and operate AI systems consumes massive amounts of electricity. To stay ahead of the curve, Meta is making a bold bet: It will trade electricity to help fund and fast-track new power-plant construction in the U.S.

As Urvi Parekh, Meta's head of global energy, told Bloomberg:

Without Meta taking a more active voice in the need to expand the amount of power that's on the system, it's not happening as quickly as we would like.

Meta's strategy is to sign long-term electricity contracts with power plant developers, often before the plants even exist. These early commitments offer financial security to developers and give Meta the right to resell excess power on wholesale markets. It's a way to manage both supply and risk, providing flexibility if energy needs fall short of projections.

Meta's move comes as the entire tech industry braces for a power crunch. Analysts at Morgan Stanley estimate that U.S. data centers could face a power shortfall of up to 13 gigawatts by 2028 – enough to power more than 10 million U.S. homes for a year.

The root of the problem is scale...

AI models like ChatGPT and Meta's own Llama require huge server farms to function. These data centers demand continuous, reliable power. The buildout of AI infrastructure is outpacing utilities' ability to expand and upgrade the grid, raising concerns about reliability and cost for ordinary consumers. As Ben Hertz-Shargel of energy consultant Wood Mackenzie said:

We're seeing a breakdown between the demand and supply sides of the market... To better orchestrate growth, you need some of the largest buyers of electricity to actively support the buildout of the supply side.

Tech Giants Compete for Power

But Meta isn't alone...

Fellow tech giants Microsoft (MSFT) and Apple (AAPL) are also exploring power trading as a way to secure clean, reliable energy for their operations. Apple has already received federal approval to trade power, while Microsoft and Meta are in the process of applying.

Each company is experimenting with unique strategies. Microsoft has filed patents for cryogenic systems to cool and power data centers, while Google has launched Project Suncatcher, a moonshot initiative to run AI in space using solar-powered satellite constellations.

Meanwhile, chip-making behemoth Nvidia (NVDA) has teamed up with Starcloud to deploy GPUs in orbit, reducing the strain on Earth's grid. And a few months ago, Nvidia invested in a nuclear fusion startup.

Even newer AI companies like Anthropic are investing billions in U.S.-based infrastructure to compete in this arms race of compute power.

These creative efforts reflect a clear reality: Tech firms need more electricity than the current system can provide. As Dan Stein, CEO of research organization Giving Green, put it, "Companies just need more electrons than the grid can currently provide."

For Meta, entering energy markets is both a necessity and a gamble. Power trading offers the ability to hedge risk, but it also comes with volatility and potential losses.

Other industries – like airlines and automakers – have used commodity trading to manage input costs, with mixed results. Ford Motor (F), for instance, famously lost $1 billion on a bad metals trade in the early 2000s.

Still, experts say it makes sense for tech giants to take this step. "Their input into production is electricity, just like for Coca-Cola (KO), it's cane sugar, corn syrup and aluminum," said Mike Kirschner, U.S. managing director of power-modeling firm Habitat Energy.

Meta plans to ease into the business, working with external partners before becoming a full-fledged energy trader. For now, the focus is on two competitive energy markets: PJM Interconnection (covering 13 eastern U.S. states) and the Midcontinent Independent System Operator, which spans much of the central U.S.

AI's Insatiable Energy Appetite

The urgency behind all of this is driven by AI's ever-growing power needs.

According to the International Energy Agency, energy use from data centers is expected to double by 2030, growing four times faster than electricity demand in other sectors. That's before factoring in experimental projects or off-planet computing.

And while the tech industry promises to build a cleaner energy future, the reality is murkier. Meta's massive data center in Louisiana, for instance, will require at least three new gas-fired plants to support its operations. That raises environmental concerns, especially as these companies pledge to hit net-zero emissions targets.

If AI-driven power demand leads to higher retail electricity prices, increased emissions, or new fossil fuel infrastructure, companies risk damaging their "social license to operate," Stein said.

Meta's power-trading ambitions are part of a broader shift in how tech companies operate. No longer just consumers of energy, they're becoming stakeholders in how it's generated and distributed. This trend could bring new efficiencies and innovations, but it also places more responsibility and scrutiny on Big Tech.

Meta founder Mark Zuckerberg has made it clear that he's willing to take big risks to prepare for what he calls the "superintelligence" era. That vision demands unprecedented infrastructure. Trading power is more than a short-term business tactic... It's a foundational part of Meta's future.

"We all believe fundamentally that there needs to be rebuilding of this muscle of building new power plants and speeding up the process," said Parekh.

Whether this strategy pays off will depend on execution, market conditions, and how the public reacts to tech giants shaping the Internet and the entire energy economy.

Regards,

Sam Latter

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