Power purchase agreements are what renewables developers use to obtain financing for construction. The contract is collateral. Worst case, the developer might need to be prepared to find a substitute offtaker for the power if a PPA with a gen AI offtaker goes bust (if brought up by whomever is underwriting the financing, if there are debt covenants, etc).

I absolutely support AI companies signing as many PPAs for low carbon energy even if they implode in the future. The PV panels, wind turbines, and potentially stationary storage will already be deployed at that point.

https://betterbuildingssolutioncenter.energy.gov/financing-n...

What if it is a 5 gigawatt data center in the middle of nowhere or if the power source is a nuclear reactor or three? Presumably, data centers are paying a premium that other customers aren't willing to pay.

Hard to say with random "what ifs." If we're starting merchant nuclear reactors back up, because they have some life left in them and can be operated safely, I support such an operating model as it pushes high carbon energy out of the generation mix until there is more clean energy on the grid.

Illinois provides subsidies to their nuclear reactors because they are low carbon [1], the federal government is subsidizing Diablo Canyon in California [2] and Palisades in Michigan [3]. Every coal fired generator in the US is more expensive to run than to replace with low carbon renewables except the one in Dry Fork, WY, [4] so subsidies are just arguments, not real economic signals.

TLDR We're kicking the can until we can get more clean energy online, and that ramp rate continues to accelerate [5].

[1] https://www.cnbc.com/2021/11/20/illinois-nuclear-power-subsi... ("Why Illinois paid $694 million to keep nuclear plants open")

[2] https://www.reuters.com/world/us/us-finalizes-11-billion-cre... ("US finalizes $1.1 billion in credits for California nuclear plant")

[3] https://news.ycombinator.com/item?id=41696884 (HN: MI nuclear plant finalizes fed loan for first reactor restart in US history")

[4] https://news.ycombinator.com/item?id=37601970 (citations)

[5] https://news.ycombinator.com/item?id=41602799 (citations)

I think you are missing my point. Microsoft signed a 20-year agreement with Constellation to restart TMI Unit 1. Do you think Constellation would make the same agreement with Open AI? The risk is completely different.

No, the point is taken, I think you’re underestimating FOMO and the hype cycle.

If a counterparty is just a bit too rational, move on, lots of other potentials. Markets are sentiment driven. When there is potentially irrational exuberance, leverage it.

Hopefully we get a nuclear reactor or three