Brookfield Asset Management Ltd. BAM-T and Microsoft Corp. MSFT-Q have reached an agreement to develop renewable power capacity, with the global technology giant turning to the Toronto-based asset manager to help run its burgeoning artificial intelligence and cloud computing services on cleaner energy.
Under a framework agreement announced Wednesday, Microsoft will back Brookfield projects that bring 10.5 gigawatts of renewable generating capacity online between 2026 and 2030 in the United States and Europe – equivalent to the power needed to run about 1.8 million homes. It will give Microsoft access to a new pipeline of renewable energy to help run its data centres.
Financial terms of the deal were not disclosed, and individual power purchase agreements are still to be negotiated as needed. It is also unclear whether Microsoft and its subsidiaries intend to use all of the new capacity for their own operations. But at current market rates, the projects encompassed by the pact could cost billions of dollars to develop.
For Brookfield, the agreement reduces the risks inherent in a huge pipeline of renewable energy projects, which are underpinned by a combined US$25-billion the asset manager has raised so far through two transition funds launched by its renewables unit. As Brookfield builds out wind and solar energy projects, it can do so knowing it has a reliable customer in Microsoft.
For Microsoft, it means more dependable access to a growing supply of clean energy, as demand for data and computing power explodes in the race to build ever more powerful AI models and move more businesses to cloud computing platforms.
There is also the growing scrutiny of the environmental impact of power-hungry data centres to consider. Microsoft has set a goal to match its total electricity consumption with zero-carbon energy purchases by 2030; it will still use other, more carbon-heavy forms of electricity, in part because of the intermittent supply of wind and solar power.
Though many of the agreement’s details have yet to be outlined, it is a major signal of intent from one of the world’s foremost technology companies and one of its largest asset managers. Microsoft had already contracted with Brookfield for about one gigawatt of renewable capacity, outside of the new agreement. In aggregate, the new energy capacity captured under the framework is far larger than any previous power purchase agreements signed by individual corporations.
It could account for about 30 per cent of Brookfield’s renewable energy capacity growth between 2026 and 2030. A number of Brookfield’s existing portfolio investments – in companies such as Spain’s X-Elio, Colorado-based Scout Clean Energy and Virginia-based Urban Grid – are expected to provide power to Microsoft.
“As the global trend of digitalization and the adoption of AI continues to drive growth in demand for electricity,” the agreement with Microsoft “is a testament to our ability to reliably deliver clean power solutions at scale to our corporate partners and accelerate the energy transition,” said Connor Teskey, the president of Brookfield Asset Management and chief executive officer of its renewables business, in a statement.
Though the deal focuses on wind and solar power, it could also include other new technologies to generate clean energy and could expand to include new developments in the Asia-Pacific region, India and Latin America.
“This collaboration with Brookfield drives the innovative development of more diverse energy grids globally,” said Adrian Anderson, Microsoft’s general manager of renewables, carbon free energy and carbon dioxide removal, in a news release.
James Bradshaw