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This might make sense for oil producers to get rid of their natural gas, which is nearly a waste material, but I'm struggling to understand how it makes sense f

This might make sense for oil producers to get rid of their natural gas, which is nearly a waste material, but I'm struggling to understand how it makes sense for Microsoft. Despite the cheap natural gas, and an abundance of investors and builders with natural gas expertise, in the competitive electricity generation market everybody is deploying solar and batteries in west Texas because it's still more profitable than gas generation. Further, there's a gas turbine shortage so Microsoft choosing to put their (presumably limited) allocation of gas turbines in West Texas, where they have good alternatives, seems a bit mysterious. Why not save that massive amount of turbines for the northeast DCs, where renewables work far poorer yet gas is more reliable? The reasons that seem most convincing to me: 1. Political environment is hostile to renewables and Microsoft doesn't want to paint a target on their back by choosing solar plus batteries, the choice others are making in West Texas. 2. Grid connection drastically changes economics, but pipelines for gas are cheap or something, so the massive cost and delay from grid interconnection simply isn't worth it 3. There are particular political favors going on with Chevron, e.g. Chevron wants gas in the area and is willing to increase MS's turbine allocation if they do it in west Texas, or Chevron is helping get around pesky local political approvals for data centers, or something like that. The cost of gas does not seem like a justification for this, though.

stonogo 4mo ago
The cost of gas is completely irrelevant. In order to bring a new large load onto the grid, you have to coordinate with ERCOT, and they just made that process more tedious. Once you get your grid connection approved and built out, you have to source your own power anyway, and frankly there just isn't enough power on the market to realize the stated datacenter buildout goals in this country. In short, you're going to have to build your own power plant anyway, so why bother with the grid? Gas is the cheapest, fastest zero-to-production choice for onsite power generation, and has been for a long time. Unless you're dealing with nuclear, the fuel cost just doesn't matter compared to the rest of the buildout, and gas wins because you can take off-the-shelf turbines and bolt them down. You can only get away with it in places that don't care about environmental regulations, which are the places most likely to approve new buildout of gas infrastructure anyway. Nobody in the northeast is going to approve the creation of a brand new carcinogen factory.
- epistasis 4mo ago
  > Gas is the cheapest, fastest zero-to-production choice for onsite power generation, and has been for a long time. Is it, though? There's a ton of projects out there waiting to get their solar on the grid in west Texas, partnering with one of them and launching the project early while waiting on the interconnection queue, and adding enough batteries, gives a more robust solution right now without the SPOF nature of large single generators. Add to that the long backorder list for gas turbines right now, with no end in sight, and I'm surprised that Microsoft would power this particular location with turbines because it's probably their best chance to do off-grid massive solar projects. Massive off-grid solar is what China is choosing for some absolutely massive new industrial projects. Nuclear is a no-go because it takes so long to deploy, but solar + batteries are cheap COTS and available in abundance, unlike gas turbines.
  - stonogo 4mo ago
    > Is it, though? Yes. There is no point in waiting for interconnection when you can just... not do that, and do all your generation behind the meter, with complete control of the generation to match your load. Solar wants an interconnect so they can sell off surplus; with gas you just turn the dial down to meet the load and walk away. The clock is running on the datacenter goldrush. 70-90% of the capex window is going to be soaked up just with construction time. Introducing a capricious ERCOT permit process and shopping around for friendly solar projects to hop in bed with makes no sense when you can just write a check and solve the problem forever. I'd bet the deal with Chevron was to enable Microsoft to hop the queue here and get those GEV turbines soonest.
    - epistasis 4mo ago
      I'm not saying wait for an interconnection, I'm saying take a project that already has a fully developed plan, that's waiting for interconnection, and build the DC right there next to it, beef up the battery component of the plan and go to town. Interconnection happens some time in the future, giving far more financial opportunities for everyone, but in the interim the electricity goes fully to the DC.
skybrian 4mo ago
They will also want reliable power, which seems like justification enough to keep their options open. A “phased, modular approach” sounds like it would give them options. Maybe Microsoft could install solar and/or batteries later and use their natural gas turbines for backup? With enough batteries they might get through the night, but seasonal shortages are much harder to handle that way. I bet a carbon tax on data centers would be popular if the Democrats get back in.
- Retric 4mo ago
  You can generally solve seasonal shortfalls cheaply by simply adding more solar / wind until you no longer have a seasonal shortfall just a massive surplus in a different part of the year. Put another way if you want to store power say 1GWh for the worst month, well a solar panel provides a lot of power over even the worst month. 20MW of solar panel averaging even 40MWh/day * 30 days = 1.2GWh and cost way less than 1GWh of batteries. Near the arctic circle Wind fill the same niche.
  - skybrian 4mo ago
    I don’t believe the “cheaply” part. You end up building storage that only gets used for one cycle a year, so the capital cost is very high per watt.
    - Retric 4mo ago
      I think you misunderstood, I am saying 20MW of solar power is less expensive than 1GWh of energy storage. Nothing in my post suggests 1GWh of storage is cheap.
  - buzer 4mo ago
    > Near the arctic circle Wind fill the same niche. What do you mean? Long periods of calm weather during cold temperatures is not unheard of in Finland and does cause issues at times due to amount of wind energy that has been built in recent times.
    - 4mo ago
outside1234 4mo ago
There is also probably a balance of payments aspect of this. Chevron uses a ton of Azure. They probably asked for Microsoft to use some amount of Chevron in exchange. This is probably that deal.
whaleofatw2022 4mo ago
Natural gas is cleaner to burn than coal, if I had to guess this is lazy half-done greenwashing, i.e. 'at least it's not coal!' Similar to California's measures for cleaner power generation.
frollogaston 4mo ago
Do any huge datacenters run on solar + battery? I thought the point of gas turbines was to have reliable power that's set up quickly.
pseudohadamard 4mo ago
There's an efficient gas turbine shortage. If you're willing to run older inefficient gas turbines it's not so bad, and when the gas is free it doesn't matter how inefficient they are. Oy vey, what a perverse incentive.

stonogo 4mo ago

The cost of gas is completely irrelevant. In order to bring a new large load onto the grid, you have to coordinate with ERCOT, and they just made that process more tedious. Once you get your grid connection approved and built out, you have to source your own power anyway, and frankly there just isn't enough power on the market to realize the stated datacenter buildout goals in this country. In short, you're going to have to build your own power plant anyway, so why bother with the grid? Gas is the cheapest, fastest zero-to-production choice for onsite power generation, and has been for a long time. Unless you're dealing with nuclear, the fuel cost just doesn't matter compared to the rest of the buildout, and gas wins because you can take off-the-shelf turbines and bolt them down. You can only get away with it in places that don't care about environmental regulations, which are the places most likely to approve new buildout of gas infrastructure anyway. Nobody in the northeast is going to approve the creation of a brand new carcinogen factory.

epistasis 4mo ago
> Gas is the cheapest, fastest zero-to-production choice for onsite power generation, and has been for a long time. Is it, though? There's a ton of projects out there waiting to get their solar on the grid in west Texas, partnering with one of them and launching the project early while waiting on the interconnection queue, and adding enough batteries, gives a more robust solution right now without the SPOF nature of large single generators. Add to that the long backorder list for gas turbines right now, with no end in sight, and I'm surprised that Microsoft would power this particular location with turbines because it's probably their best chance to do off-grid massive solar projects. Massive off-grid solar is what China is choosing for some absolutely massive new industrial projects. Nuclear is a no-go because it takes so long to deploy, but solar + batteries are cheap COTS and available in abundance, unlike gas turbines.
- stonogo 4mo ago
  > Is it, though? Yes. There is no point in waiting for interconnection when you can just... not do that, and do all your generation behind the meter, with complete control of the generation to match your load. Solar wants an interconnect so they can sell off surplus; with gas you just turn the dial down to meet the load and walk away. The clock is running on the datacenter goldrush. 70-90% of the capex window is going to be soaked up just with construction time. Introducing a capricious ERCOT permit process and shopping around for friendly solar projects to hop in bed with makes no sense when you can just write a check and solve the problem forever. I'd bet the deal with Chevron was to enable Microsoft to hop the queue here and get those GEV turbines soonest.
  - epistasis 4mo ago
    I'm not saying wait for an interconnection, I'm saying take a project that already has a fully developed plan, that's waiting for interconnection, and build the DC right there next to it, beef up the battery component of the plan and go to town. Interconnection happens some time in the future, giving far more financial opportunities for everyone, but in the interim the electricity goes fully to the DC.

skybrian 4mo ago

They will also want reliable power, which seems like justification enough to keep their options open. A “phased, modular approach” sounds like it would give them options. Maybe Microsoft could install solar and/or batteries later and use their natural gas turbines for backup? With enough batteries they might get through the night, but seasonal shortages are much harder to handle that way. I bet a carbon tax on data centers would be popular if the Democrats get back in.

Retric 4mo ago
You can generally solve seasonal shortfalls cheaply by simply adding more solar / wind until you no longer have a seasonal shortfall just a massive surplus in a different part of the year. Put another way if you want to store power say 1GWh for the worst month, well a solar panel provides a lot of power over even the worst month. 20MW of solar panel averaging even 40MWh/day * 30 days = 1.2GWh and cost way less than 1GWh of batteries. Near the arctic circle Wind fill the same niche.
- skybrian 4mo ago
  I don’t believe the “cheaply” part. You end up building storage that only gets used for one cycle a year, so the capital cost is very high per watt.
  - Retric 4mo ago
    I think you misunderstood, I am saying 20MW of solar power is less expensive than 1GWh of energy storage. Nothing in my post suggests 1GWh of storage is cheap.
- buzer 4mo ago
  > Near the arctic circle Wind fill the same niche. What do you mean? Long periods of calm weather during cold temperatures is not unheard of in Finland and does cause issues at times due to amount of wind energy that has been built in recent times.
  - 4mo ago

outside1234 4mo ago

There is also probably a balance of payments aspect of this. Chevron uses a ton of Azure. They probably asked for Microsoft to use some amount of Chevron in exchange. This is probably that deal.

whaleofatw2022 4mo ago

Natural gas is cleaner to burn than coal, if I had to guess this is lazy half-done greenwashing, i.e. 'at least it's not coal!' Similar to California's measures for cleaner power generation.

frollogaston 4mo ago

Do any huge datacenters run on solar + battery? I thought the point of gas turbines was to have reliable power that's set up quickly.

pseudohadamard 4mo ago

There's an efficient gas turbine shortage. If you're willing to run older inefficient gas turbines it's not so bad, and when the gas is free it doesn't matter how inefficient they are. Oy vey, what a perverse incentive.