Exowatt has a rock-solid plan to provide cheap, abundant energy for AI data centers – News

Exowatt Inc., a solar-thermal energy startup backed by OpenAI Group PBC Chief Executive Sam Altman and other high-profile investors, wants to solve the artificial intelligence energy crisis with millions of hot rocks.

To do that, it has raised millions of dollars – $50 million in fact, led by MVP Ventures and 8090 Industries. Today’s round also saw participation from other investors that included Atomic, Bridge Bay Ventures, the Florida Opportunity Fund, DeepWork Capital, Dragon Global and Massive VC.

The round is described as an extension of the company’s original $70 million Series A, which closed in April. Altman’s involvement stems from its original seed funding round in 2024, where he was one of several angel investors.

Exowatt says its thermal battery technology, powered by solar energy, has the potential to provide enormous AI data centers with electricity at rates as low as one cent per kilowatt-hour, which would make it around 90% cheaper than the average U.S. grid rate.

If it can do this, it’s sure to be of enormous interest to AI data center operators such as Microsoft Corp., Amazon Web Services Inc., Google LLC and Oracle Corp., which are all desperate for energy as they scramble to build out their infrastructure. With data centers springing up across the country, operators are desperate to secure a power source for them, but grid queues in some locations can stretch for years. As a result, data centers are being built faster than power suppliers can keep up.

Exowatt is pitching a somewhat unconventional solution to this looming crisis, with millions of superheated rocks held in storage that can provide energy around the clock. The company’s solar-thermal energy works by using concentrated solar power to heat up special ceramic or rock-based materials to temperatures as high as 1,200°C when the sun is shining.

These materials act as thermal batteries, releasing the stored heat to power steam turbines that generate electricity, even when the sun goes down. It transforms rocks into a power source, and once the system is set up and in place, it can provide electricity much more cheaply than through conventional means, which typically cost from eight to 15 cents per kilowatt-hour.

The math is compelling, especially when considering the future energy requirements of data centers. Today, these facilities consume about 1% of the world’s electricity, but the demand for AI is forecast to push that up to around 3% to 4% by the end of the decade, Exowatt says.

Exowatt’s challenge is that it needs to gear up its manufacturing operation to produce 1 million thermal battery units per year. It said this target is necessary for it to deliver on its penny-per-kWh promise through economies of scale. Doing so is easier said than done, though, considering that Exowatt has only built a handful of batteries so far. Still, it has gotten enough backing to at least attempt to reach that goal.

Altman is one of a number of voices in the AI industry who has been quite vocal about the need to solve the looming power bottleneck, and many of his rivals are pursuing different ideas. For instance, Meta Platforms Inc. is exploring nuclear energy, particularly the use of small modular reactors that can be located close to its data centers. Google LLC has also invested in a number of nuclear energy startups, as has Amazon.

Aside from exploiting more fossil fuels, renewable energy is really the main alternative to nuclear power, and it is certainly popular with environmentalists, but the problem is that solar- and wind-farms require affordable and reliable storage solutions to be able to meet AI’s power demands 24/7. Most existing energy storage systems use lithium-ion batteries, but they’re very expensive and there are concerns around the availability of the rare earth elements needed in their construction.

Thermal storage provides some advantages. The rocks and ceramics are much cheaper, and they’re also more durable. Exowatt says its rock-based storage systems can maintain heat for about five days and they never degrade – unlike lithium-ion batteries, which gradually lose capacity over the endless charging cycles they have to endure.

That said, there are questions about the real-world performance of Exowatt’s system, which has never been attempted at such a large scale, as well as grid integration. Previous solar-thermal energy projects have suffered with efficiency problems and unforeseen maintenance costs, and Exowatt will have to show that its batteries can deliver on its cost promises and operate in diverse climates. That may be why the company hasn’t yet announced a specific timeline for deploying its technology, nor any major customers.

Even so, Exowatt has the capital, the demand and timing on its side, and if it can scale up its technology to achieve its ambitious price targets, it might just become the rock on which the future AI industry is built.

Images: Exowatt