In August 2023, the Department of Energy earmarked $12.5 million to fund engineering studies for Project Bison. When completed, the carbon removal and storage project in Wyoming would include the largest direct air capture facility in the world.
The project, led by CarbonCapture Inc., was considered a leading contender for a future round of federal direct air capture hub prizes. And the company, which had announced the project in late 2022, had already embarked on an ambitious community engagement program that it hoped could be replicated around Wyoming by other developers. Its storage partner, Frontier Carbon Solutions, had secured the requisite permits for carbon dioxide injection from the state.
But exactly a year after the announcement of the DOE grant, CarbonCapture announced it was leaving Wyoming behind, and pausing deployment on Project Bison. That pivot, CEO Adrian Corless wrote at the time, was primarily due to the company’s struggles obtaining access to clean electricity given “intense competition from data centers.”
That sudden setback for Project Bison has highlighted one of the central challenges for DAC projects: how to power its energy-hungry processes in the midst of a surge in load growth, where data centers are soaking up new sources of clean electricity. And while Project Bison may be one of the first casualties in that power struggle, it’s unlikely to be the last.
CarbonCapture initially assumed Project Bison would be powered by behind-the-meter renewable energy and storage, explained VP of business development Patricia Loria. But renewables developers in Wyoming had a lot of caveats for powering the project, including up-front cash payments and flexible timelines that, given CarbonCapture’s size and balance sheet, the company couldn’t make work.
“Additionally, given where the energy storage landscape is, generally you’re still talking about having to be connected to the grid as well,” Loria added. “It really came down to whether or not we thought we could have access to the grid in a reasonable timeframe.” That connection, she added, needed to be close enough to a viable geological storage site to avoid the buildout of pipelines to transfer carbon dioxide from the energy-intensive DAC facility to the wells.
That ultimately wasn’t possible in Wyoming. “We couldn’t even get in a queue,” Loria said. The company initially believed they’d have access to several hundred megawatts by 2027. A further interconnection study changed that timeline to 2030, with the need to build out expensive substations and transmission.
“That’s when, for us, it just didn’t make sense to stay there,” Loria said.
Priority imbalances
CarbonCapture is far from the only DAC company facing the clean energy procurement challenge. The lack of coordination between the DAC industry and electric utilities is a serious problem for deployment nationwide, said Kajsa Hendrickson, director of policy at Carbon180.
“How on earth are we going to get these projects up and going if utilities aren’t involved in their resource planning?” Hendrickson asked. “One of the first questions we asked with Bison was, ‘how is it not the very first question you guys looked at when you were going into Wyoming?’”
In Hendrickson’s experience, most utilities still aren’t familiar with DAC, even in regions where projects are planned. “That was a really big shock for me, because most utilities do integrated resource planning years in advance,” she said. “Granted, DAC at this point in time is small. But when you’re talking about potential megaton facilities, that is not a small energy ask.”
It really came down to whether or not we thought we could have access to the grid in a reasonable timeframe.
The top concern for most smaller DAC companies looking to build new projects, Hendrickson said, is project finance. As a result, even considerations like interconnection queues may not get addressed. That’s “very understandable,” she added, “but it’s a really intertwined concern…the question of how they’re going to get the other 50% of financing covered should go hand-in-hand with the question of, ‘is the location you’re looking at actually going to be able to connect you to a grid?’”
Project Bison’s problems, she added, are likely to bring the electricity issue more to the forefront. That’s in part because the energy problem disproportionately impacts smaller companies, like CarbonCapture, Heirloom, or even Climeworks.
“If it comes down to [Occidental] and 1PointFive being able to build their own massive solar facilities that they’re then connecting to the grid, that’s not something that most companies can do,” she said.
That’s a problem that DOE is also focusing on. In its latest notice of intent for the second round of DAC hub funding, released in September, the agency has designated up to $300 million for energy generation, via “Infrastructure Scaling Platforms” that would provide DAC developers with clean energy, storage, or transportation.
“This is really where DOE is going to have to step in and provide some additional bridging to make it so that people can get access to energy,” Hendrickson said. Widening federal funding to cover energy infrastructure will help ensure more competition in the DAC market, she added.
What’s the fix?
The energy scramble between DAC developers and other industries like data centers won’t be limited to Wyoming, Loria predicted.
She pointed to Texas and Louisiana as examples of places where there’s “a lot of activity in Class VI wells” as additional locations where competition for energy will crop up. Both of those states have also seen an increase in data center activity; over the summer Louisiana introduced a tax break for data centers, and tech giants including Google, Amazon, and Meta have all expanded their Texas data center presence in the last several years.
“There is prioritization [for clean energy,]” Loria said. “And priority needs to be for decarbonization.” Even if today’s larger DAC projects likely aren’t enough to “change the overall equation,” she said, they’re a critical solution that needs to be considered as part of the resource mix.
That type of prioritization probably requires regulation. “Should an AI data center be able to dominate energy generation for the region if they’re paying for it?” Hendrickson asked. “Should there be some priorities over where energy generation goes?”
That’s a question not just for DAC, she added, but for all energy transition industries: “Who and where do we prioritize deployment?”
Loria said CarbonCapture hasn’t finalized the new location for Project Bison, but that the company is rethinking deployment sizes, to make sure projects are “right sized” for conversations with energy providers.
They’re in the final stages of considering several locations, to determine which could move on the right timeline, she explained. The company is prioritizing “advantaged locations,” like those where point source projects are already established, or where other energy projects are already happening.
For instance, CarbonCapture is “really supportive” of small modular nuclear for DAC, she added. (The industry may have some competition there, too, though; just this week, both Google and Amazon made moves to power data centers with SMRs.)
The company’s initial engineering study grant from DOE is still under negotiation, and it’s not yet clear whether that grant could be applied to a different location.
More impactful to the company’s decision on where to site Project Bison however, is the recent notice of intent, which Loria said “could create some changes in our strategy.” CarbonCapture still likes its chances of being selected for this round of DAC hub funding, she explained. DOE’s expected timeline for announcing funding winners — mid 2025 — has forced the siting timeline “in a good way.”
Despite it all, though, Loria doesn’t think DAC and data centers will always conflict. “It just so happens that a lot of our customers also use data centers, a lot of these big tech companies, so we are having a lot of those kinds of conversations together,” she said.
Hendrickson, at Carbon180, said the relationship between DAC companies and hyperscalers is “a bit of a double edged sword.”
“You have Microsoft, who may be putting all of the money in to build a data center but then who’s also buying CDR credits, and I think that makes for a really interesting conundrum,” she said. Tech companies may continue advocating for DAC facilities as their AI-related emissions rise, she added — because they’ll keep building new data centers to support their AI ambitions.
“I think that puts them in a bit of a pickle,” she said. “It’s a pickle that we’re going to have to have regulation for, and have to work out at the federal level to address, because that’s not something companies are generally incentivized to make a decision on.”
