Google (GOOGL) Stock; Falls Slightly as Form Energy Battery Deal Signals High-Cost Strategy

TLDRs;

• Google invests $1B in Form Energy’s 100-hour batteries, sparking investor caution over high upfront costs.
• Form Energy gains first major customer, boosting long-duration battery tech for renewable energy storage.
• Special Minnesota tariff allows Google to fund clean energy without raising local electricity rates.
• AI-driven demand prompts Big Tech to explore long-duration storage for carbon-free, 24/7 operations.

Google has agreed to purchase approximately $1 billion worth of iron-air batteries from the US startup Form Energy for its upcoming Minnesota data center. According to multiple sources, the deal represents the first major customer order for Form Energy, a company that has spent several years developing its long-duration battery technology.

The announcement coincided with a slight decline in Google (GOOGL) stock, which fell 1.7% in early trading, reflecting investor caution over the high upfront cost.

The batteries are capable of delivering 300 megawatts continuously for roughly 100 hours, providing a significant boost to renewable energy reliability and helping stabilize the flow from wind and solar sources.

Form Energy’s CEO, Mateo Jaramillo, said the startup is concurrently raising a $500 million funding round and plans to go public next year. With total funding of $1.4 billion to date, the company is positioning itself as a key player in the growing long-duration energy storage sector.

First Major Customer Accelerates Manufacturing

For Form Energy, the Google deal is more than just financial support; it’s a major vote of confidence that could accelerate production plans at its West Virginia factory. Long-duration iron-air batteries are still in the early stages of commercial adoption, and securing a lead customer of Google’s scale signals confidence in the technology’s reliability and viability.

Alphabet Inc., GOOGL

For Google, the purchase ensures that its Minnesota facility will operate on a consistent, carbon-free energy supply, avoiding reliance on fossil-fuel back-up generators.

Special Tariff Enables Clean Energy Investment

A key factor making this high-cost deal possible is a unique regulatory framework in Minnesota. The Clean Energy Accelerator Charge (CEAC) allows large new energy users like Google to fund up to 1.9 gigawatts of clean energy and grid upgrades without increasing rates for existing utility customers.

Xcel Energy, the local utility, can integrate long-duration storage options such as Form Energy’s batteries without treating them as prohibitively expensive under standard regulations.

Google has previously leveraged this tariff to support enhanced geothermal projects in Nevada, illustrating a repeatable model for clean energy financing. The arrangement enables tech companies to invest in advanced storage solutions while keeping energy costs predictable.

A Template for Big Tech’s Carbon-Free Future

The deal also reflects a broader industry trend: the growing energy demands of AI and other compute-heavy operations. Some tech firms have historically relied on fossil-fuel power to meet data center energy needs. By acting as a lead customer for a promising storage technology, Google is demonstrating a pathway for Big Tech to transition to 24/7 carbon-free operations without waiting for slower market developments.

Iron-air batteries capable of multi-day discharges provide the long-duration storage required for continuous renewable energy supply. This approach helps ensure operational reliability while reducing the carbon footprint of high-demand data centers, offering a blueprint for other companies seeking similar solutions.

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