Resource-heavy AI data centers have been facing backlash across the US as big tech is increasingly having to answer to locals irate about skyrocketing power usage and utility rates.
Microsoft is angling to get ahead of this and be what it calls a “good neighbor” with its newly-articulated Community-First AI Infrastructure strategy.
Notably, the tech giant is promising that it will not cause increased power and water bills in the communities where it builds, owns, and operates data centers. “We’ll pay our way,” Microsoft said, so that electricity prices don’t increase, and it will also minimize its water use and “replenish more of your water than we use.”
“Successful infrastructure buildouts will only progress when communities feel that the gains outweigh the costs,” Microsoft President Brad Smith said in the blog post announcing the initiative. “Communities value new jobs and property tax revenue, but not if they come with higher power bills or tighter water supplies. Without addressing these issues directly, even supportive communities will question the role of data centers in their backyard.”
Microsoft’s commitments around water, electricity
There’s no getting around the fact that, at least for now, AI uses massive amounts of electricity. According to the International Energy Agency (IEA), data center electricity demand in the US will more than triple by 2035.
To ease this burden on local communities, Microsoft said it will take four important steps:
- It will work with utilities and public commissions to set the rates it pays high enough to cover data center electricity costs (including build-outs, additions, and active use). “Our goal is straightforward: To ensure that the electricity cost of serving our data centers is not passed on to residential customers,” Smith emphasized. For example, the company is supporting a new rate structure Wisconsin that would charge a class of “very large customers,” including data centers, the true cost of the electricity required to serve them.
- It will collaborate “early, closely, and transparently” with local utilities to add electricity and supporting infrastructure to existing grids when needed. For instance, Microsoft has contracted with the Midcontinent Independent System Operator (MISO) to add 7.9GW of new electricity generation to the grid, “more than double our current consumption,” Smith noted.
- It will pursue ways to make data centers more efficient. For example, it is already experimenting with AI to improve planning, extract more electricity from existing infrastructure, improve system resilience, and speed development of new infrastructure and technologies (like nuclear energy).
- It will advocate for state and national public policies that ensure electricity access that is affordable, reliable, and sustainable in neighboring communities. Microsoft previously established priorities for electricity policy advocacy, Smith noted, but “progress has been uneven. This needs to change.”
Microsoft is similarly committed when it comes to data center water use, promising four actions:
- Reducing the overall amount of water its data centers use, initially improving it by 40% by 2030. The company is exploring innovations in cooling, including closed-loop systems that recirculate cooling liquids. It will collaborate with local utilities to map out water, wastewater, and pressure needs, and will “fully fund” infrastructure required for growth. For instance, in Quincy, Washington, Microsoft helped construct a water reuse utility that recirculates cooling water to preserve limited drinking water supplies.
- Replenishing more water than it uses. This means restoring “measurable amounts” of water to the same districts where it was used, while also helping communities improve their systems. For example, in Nevada and Phoenix, Microsoft has partnered with utilities on a leak detection initiative that helps find breaks and prevent water losses, thus adding to the “total usable water supply.” In the Midwest, it is helping restore historic oxbow wetlands that naturally recharge groundwater.
- Providing greater local transparency so that people understand how much water is being used. This will include publishing water use data for each data center region, as well as providing progress reports around replenishment.
- Advocating for public policies that help minimize water use. Microsoft will support state and federal efforts to make reclaimed and industrial recycled water the default data center water supply.
“Our commitment ensures that our presence will strengthen local water systems rather than burden them,” Smith noted.
Articulating first-order design principles
But these objectives aren’t new, observed Matt Kimball, VP and principal analyst at Moor Insights & Strategy. “These have been the first-order design principles for some time,” he said. “Microsoft is articulating what it has already been doing for the sake of goodwill, rather than stating a new strategic outlook.”
Other big tech firms like IBM have also made commitments to data center practices that are environmentally and socially responsible. However, Microsoft is reinforcing a community-centered model of social and environmental responsibility, “thus embedding stakeholder engagement and long-term societal impact directly into data center development strategy,” said Yaz Palanichamy, senior advisory analyst at Info-Tech Research Group.
Large-stakes data center infrastructure expansion is not something that can be accomplished overnight, Palanichamy emphasized. Whether these collective initiatives are undertaken by Microsoft, Google, IBM, Amazon, Apple, Meta, or others, long-term strategic success and meaningful alignment with the sustainable development principles governing the People, Planet, and Prosperity philosophy is key, he noted.
It is “uplifting” to see tech leaders like Microsoft taking a proactive role here, he said. Valuable lessons can then be learned, adapted, and iterated by smaller private technology organizations. Overall, organizations should advance environmental stewardship through responsible energy and water use, while at the same time defining “realistic, measurable, and achievable” sustainability metrics that can support, rather than complicate, their long-term operational vision, Palanichamy noted.
For end users, however, it’s difficult to predict the “sustainability tax” on Microsoft customers that could arise from this newly-articulated strategy, experts note. “While pursuing environmental and social responsibility is both commendable and necessary, the potential downstream financial implications of such initiatives should be carefully evaluated with a fine-toothed comb rather than underestimated or simply overlooked,” Palanichamy noted.