FEATURE-AI data explosion in Mexico fuels rise of dirty energy

Data center boom helps drive fossil fuel revival

Mexico's grid is behind AI in its modernization

Natural gas as a temporary solution to Big Tech

Diana Baptista & Fintan McDonnell

The country's power infrastructure is overloaded and pollution has increased due to the shortfall in green power, despite promises by government and industry to increase capacity.

The data centers are huge warehouses that are the size of Olympic stadiums. They sprawl over industrial parks and house hundreds of servers, which consume a lot of energy. These servers power the most powerful technology companies, like Microsoft, Google, and Amazon.

The report stated that while Microsoft waits for the connection to Mexico's struggling power grid, it uses seven natural gas generators to provide 10.5 megawatts per year.

Marco del Prete said that the state of Queretaro is at the forefront of data centers, as demands for 200MW of electricity have sparked a rush to upgrade infrastructure.

Del Prete said that data centers coming to Queretaro would invest in transmission and distribution infrastructure in order to reduce the strain on the grid. According to Adriana Rivera of the Mexican Association of Data Centers industry group, by 2030 the data center sector is expected to require 1.5 gigawatts of power.

According to Mexico's latest national energy plan, this would consume 5% of the new energy capacity that it plans to build before 2030.

Microsoft's report on the environment said that grid connections would not be available until 2027. Therefore, natural gas generators are a "cost-effective and accessible" interim solution. The report stated that the generators emit less carbon dioxide than other fossil fuels. This is equivalent to the annual emissions from 2,180 gasoline powered cars.

Microsoft said in a statement that its data centers in Mexico use grid power for their primary source of energy, and backup generators are only used in emergency situations.

According to data from the government, President Claudia Sheinbaum, investment in solar energy is expected to drive more data centers in Mexico where, in 2024, 77% of the energy generated will be by fossil fuels.

The Mexican Data Center Association has made bold commitments to the industry. One of them is the promise to make renewable energy their primary source of power by 2023.

The goal was not given a time limit.

Microsoft says that it has power purchase agreements with renewable energy in 24 countries and aims to achieve 100% direct renewable electricity for all its operations by 2025.

Amazon and other large tech firms claim to have achieved their goal of purchasing renewable energy projects that will match the total electricity consumption across all their global operations.

Even if the country improves its clean energy infrastructure, it is not clear how far data centers will be able to transition to renewable sources of energy.

The locals are already struggling with a bad energy infrastructure, which causes frequent power outages and increases in pollution.

In its national electric system 2024-2037 program, the Mexican Energy Secretary warned of an increase in electricity demand 'boosted by data centers expansion.

"Mexico is capable of producing much more energy, but distribution and transmission systems have not been modernized for many years," said Rivera who represents nine out of ten Mexican data centers.

"We won't stop relying on fossil fuels because power stability is so high."

Slow Transition

Data centers need stable, uninterrupted electricity to protect critical infrastructure, such as hospitals, airports, banks, and other services. They also require huge amounts of water and energy to keep their servers cool.

By 2030, 100 data centers are expected to be built in Mexico.

Rivera says that the renewable energy infrastructure in the country is not keeping up with demand and new technologies will be needed to provide the stability so desperately required. Battery storage technologies can help to fill the void created when the sun or wind stop shining, but are still not widely used.

The Mexican government released an infrastructure plan in October to add 28 GW of energy by 2030. 80% of that would come from renewable sources, primarily solar power. According to the plan, by 2030, 38% of the energy produced in Mexico will come from clean and renewable sources, such as geothermal or hydroelectric power. The data center industry, however, isn't waiting and has already begun to invest in larger and more energy-intensive projects.

"First, it is important to establish ourselves as a business. Rivera said that we need to strengthen the electrical grid... and later migrate towards cleaner energy schemes.

There are many examples of how business goals can override environmental commitments.

CloudHQ, a U.S.-based tech company, announced in September that it would invest $4.8 billion for the construction of a 900 MW data center – the largest one yet built in this country. Keith Harney said that clean energy was important, but it "sometimes didn't have speed we needed" in a press conference with the president.

ACCELERATING FOSSIL FUELS

Around the world, the story of Mexico is a tug-of-war between AI's fast growth and its impact on the climate.

The demand for data centers accelerates fossil fuel energy consumption, even though the world is vowing to reduce it, Tamara Kneese, Director of the Climate, Technology and Justice Program, at the Data and Society Research Institute, a nonprofit independent, told AFP.

In the United States President Donald Trump issued executive orders in order to support the heavily polluting coal sector, with a view to meeting the requirements of new data centres.

According to the International Energy Agency, fossil fuels like coal and natural gases provide around 56% the electricity consumed in data centers worldwide; renewables provide 27%.

Allgood, of AllAI Consulting, explained that data centers use diesel or gas generators either as their primary energy source or as a back-up during power outages.

Mexico exempts data centers located in industrial parks from releasing environmental impact reports. As a result, the exact emission levels of warehouses in Queretaro are still a mystery. It's hard to hold someone accountable when you're not even sure what's going on, said Kneese.

(source: Reuters)