Alphabet announced its plan to acquire clean energy firm Intersect for $4.75 billion in cash, along with assumed debt, as technology giants invest billions to enhance the computing and power capabilities required for advancing artificial intelligence.

Major tech companies have increased their investments in energy companies as U.S. power grids struggle to meet the rising electricity demand of generative AI during an escalating competition to leverage the flourishing technology.

As part of the agreement, the parent company of Google will obtain Intersect's energy and data center initiatives that are in progress or being built.

The firm possesses $15 billion in assets that are either in operation or being built. By 2028, it is anticipated that Intersect projects will contribute around 10.8 gigawatts of power, either operational or under development. This exceeds over 20 times the power generated by the Hoover Dam.

The purchase contributes to a series of Alphabet's investments and collaborations in the energy sector. Earlier this month, the utility firm NextEra enhanced its collaboration with Google Cloud to develop new energy resources for the company's activities throughout the U.S.

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In December of the previous year, Google and TPG Rise Climate supported Intersect in a funding round exceeding $800 million. The announcement also specified intentions to create industrial parks that would host gigawatts of data center capacity alongside new clean energy facilities.

Intersect's functions will continue to be distinct from Alphabet. According to Alphabet, the firm's current operating assets in Texas and its operational and in-progress assets in California will remain outside the acquisition and function as a separate entity, backed by current investors.

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Its Texas initiatives feature Quantum, a clean energy storage system constructed right next to a data center complex for Google.

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According to Alphabet, Intersect will additionally investigate various emerging technologies to enhance and diversify energy supply, while backing Google's investments in U.S. data centers.