Rick Barrett
Microsoft has abandoned data center projects set to use 2 gigawatts of electricity in the U.S. and Europe in the last six months due to an oversupply relative to its current demand forecast, Reuters reported Thursday, citing an industry analyst.
The tech giant's withdrawal from new capacity leasing was largely led by the decision not to support additional training workloads from ChatGPT maker OpenAI, the analyst firm TD Cowen said in a research note obtained by Reuters.
TD Cowen did not say which projects Microsoft had abandoned.
In a statement, Microsoft said the moves will not affect the $3.3 billion data center now under construction in Mount Pleasant.
Cowen said in February that Microsoft had scrapped leases totaling "a couple of hundred megawatts" of capacity with at least two private data center operators.
"Thanks to the significant investments we have made up to this point, we are well positioned to meet our current and increasing customer demand," a Microsoft spokesperson said in an email to the Journal Sentinel.
"Last year alone, we added more capacity than any prior year in history," the statement said. "While we may strategically pace or adjust our infrastructure in some areas, we will continue to grow strongly in all regions. This allows us to invest and allocate resources to growth areas for our future. Our plans to spend over $80B on infrastructure this FY remain on track as we continue to grow at a record pace to meet customer demand."
In southeast Wisconsin, Microsoft currently has a $3.3 billion data center under construction in Mount Pleasant and a smaller one planned for Kenosha.
Earlier this month, without explanation, the company paused construction on expansion sites for the Mount Pleasant location.
“The long and short of it is that we strategically pace our infrastructure,” Microsoft spokesman Nick Michetti said in an email to the Journal Sentinel last week.
"Our commitments to Wisconsin have not changed. We’re fully on track with construction on our data center in Mount Pleasant, it’s still expected to go online in 2026, and our $3.3 billion commitment remains intact," Microsoft said in the statement to the Journal Sentinel.
"We have expansion sites in Mount Pleasant where we intend to build additional infrastructure, and we’ve already done preliminary work for those future builds."
In a response to Reuters, Microsoft said while it may "strategically pace or adjust our infrastructure in some areas, we will continue to grow strongly in all regions."
Last week, Microsoft told the Journal Sentinel it remained “fully on track” with phase one of the $3.3 billion Mount Pleasant project and that it’s still expected to go online in 2026.
Data centers house thousands of computers, in one or more buildings, linked to the outside world by fiber optic cables. They enable most everyday online activities, including social media, streaming video, banking, ChatGPT and much more.
Data centers are measured by the amount of electricity they consume.
When phase one of the Mount Pleasant project is complete, it will require the equivalent of approximately 450 megawatts of electric utility capacity, according to Microsoft, which would be less than one-half gigawatt.
Comparing data center and residential electricity usage requires rough calculations, but energy experts say 450 megawatts could meet the needs of more than 300,000 homes.
The Mount Pleasant project has been at the center of a debate over the need for a We Energies gas-fired power plant in Oak Creek.
We Energies says it needs the plant, and other gas generating facilities, to satisfy the growing demand for electricity in southeast Wisconsin, including data centers.
Critics say the demand for data centers remains uncertain and that We Energies ratepayers could be saddled with higher electric rates for gas plants that won't actually be needed.
This story has been updated with new information.
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