According to a new report by the International Energy Agency, the world will spend $580 billion on data centers this year – $40 billion more than will be spent on finding new oil supplies.
These numbers help illustrate some big changes in the global economy, and the comparison of data centers and oil seems particularly apt given concerns about how Genetic AI may accelerate climate change.
Kirsten Korosec, Rebecca Bellan, and I discussed the report’s findings on the latest episode of TechCrunch’s Equity podcast.
There’s no doubt that these new data centers will be power-hungry and could put even more strain on already taxed power grids. However, Kirsten pointed to a potential upside, with solar poised to power many of these new projects, which could also create new opportunities for startups pursuing innovative approaches to renewable energy.
We also discussed how these projects will be funded, with OpenAI saying it has committed $1.4 trillion to building data centers, Meta committing $600 billion, and Anthropic recently announcing a $50 billion data center plan.
You can read a preview of our conversation, edited for length and clarity, below.
Kirsten: Here is what I think is the potential upside. So Tim De Chant, who’s our climate technology reporter, has done a lot of reporting on not just data centers, but how a lot of data centers are turning to renewables because from a regulatory perspective [hurdles] and the cost, it is the best. It’s much easier to get a permit to throw a bunch of solar panels next to a data center.
Techcrunch event
San Francisco
|
13-15 October 2026
So for me, the positive is that it could mean a real positive for any kind of company that’s doing interesting things around renewable energy or data center design and some of the technology to reduce global emissions.
But of course, the sheer number for me is what really stood out. As a former energy reporter, I know how much is spent trying to find new oil.
Rebecca: I mean, it’s a lot. And a lot of that comes from the U.S. I think the report found that half of the electricity demand will come from the U.S., and the rest is a mix of China and Europe.
And another thing that struck me was that most of the data centers are coming up in cities or near cities, like populations of a million people, or so. This means that there is a much greater challenge with connecting to the network and connecting paths. I think, in your view, renewables should do it [be a focus] — it’s just good business, not because of environmentally friendly policies.
Kirsten: Redwood Materials’ new business unit, Redwood Energy, will be an interesting company to watch. A few months ago, I went to their big reveal, and they’re taking the old EV batteries that aren’t ready for recycling, and then they’re building these microgrids, and then they’re looking for dedicated AI data centers. And that, in my opinion, will alleviate the problem or concern that you just mentioned.
The question is: Will other companies do it? Are there other Redwood Energies out there trying to do the same thing? And how big of an impact could they have? Because I think like stress on the power grid, especially during certain times of the year like the middle of the summer, for example, in places like Texas that have rolling blackouts and blackouts, that’s going to be a real concern. And it could spur a whole new kind of investment in companies that do what Redwood does.
Anthony: It also highlights this question of what will this do to the spaces we live in? Even if they are not in the cities themselves, I feel that the landscape will certainly be transformed by construction on this scale.
And then, of course, there’s also that question of how much of [the planned data centers are] it is actually going to be built because there are definitely very ambitious plans that require huge amounts of spending.
To start with OpenAI, this is a company that a lot of people are talking about, how much money are they actually making versus the trillions of dollars in capital commitments that they have for the next decade. And then there was this whole controversy about the CFO saying, “The government should stop our loans to build these data centers.” And then he says, “No, no, no, no, no, I didn’t mean backstop, that was a bad choice of words,” but it looks like they were asking for an extension of the tax credits from the CHIPS Act.
I think this will be an effort that will not just fall to the companies, but also to the government — or at least that will be a question that the government is considering in the coming years.
