C-PACE & Thermal Harvesting: A Solution for the $500B Expansion of Data Centers in the United States?

Are data centers an opportunity for C-PACE financing, structured as a source of capital for onsite energy systems? I find myself uniquely qualified to ponder this question—and, at the same time, equally unqualified.

I spent the first half of my career as a leader and entrepreneur in the clean energy industry, founding and running Alpine Geothermal Drilling, a Colorado-based geothermal drilling and construction company in a additional to leading the national effort for geothermal advocacy. I also hold a physics degree and have a robust understanding of energy harvesting techniques, renewable energy, and energy efficiency. But data centers? They’re a different beast altogether—or, more accurately, energy hogs.

Between the servers and cooling systems, data centers consume an average of 100–200 kWh per hour, with larger mega-centers using exponentially more. Their valuation follows traditional real estate principles, but also rely on other measures core to their success, such as power capacity, utilization rate, location, connectivity, and reliability with?energy and uptime being more than operational concerns; they are the lifeblood of their business model.

Unlike an office building, where energy efficiency simply cuts costs, a data center's value proposition hinges on power availability and system reliability. Any solution that enhances energy efficiency doesn’t just improve the bottom line—it increases resiliency, extends asset life cycles, reduces maintenance costs, and ultimately enhances valuation and corresponding attractiveness to tenants.

The $500 Billion AI Data Center Expansion & the Energy Crisis

The recent $500 billion AI infrastructure initiative, spearheaded by OpenAI, SoftBank, and Oracle, underscores the massive investment required to support AI's future. This initiative alone aims to develop new AI data centers across the U.S., creating over 100,000 jobs and accelerating the race for computational capacity.

However, the energy demand that comes with AI-driven data centers is staggering. In 2023, U.S. data centers consumed 176 terawatt-hours (TWh) of electricity, representing 4.4% of the nation’s total energy consumption. Projections suggest this could rise to 12% by 2028, driven by the surging demand for AI, machine learning, and cloud computing.

This raises a fundamental question: How do we scale data center infrastructure without crippling the energy grid?

The Role of Thermal Harvesting & Integrated Energy Systems

This is where onsite energy innovation becomes critical. Whiskey in hand, wearing my structured finance hat, physics hat, and renewable energy hat—I start geeking out about thermal harvesting.

What Is Thermal Harvesting?

The traditional definition of thermal harvesting is "the process of capturing and converting heat into electricity," but I have a broader definition or understanding that I have developed through my experience over the years. Thermal harvesting involves the capturing, repurposing, optimizing or transfer of thermal energy, i.e. Joules, to create efficiencies in an enclosed energy system whether it be thermal, electrical or a combination of the two. Thermal energy is a natural byproduct of data center operations. Instead of simply venting heat into the atmosphere, smart energy systems can relocate or convert it into usable energy or find more efficient means of its transfer out of the building and into the environment.

Potential solutions include:

• Industrial Synergies – Leasing waste heat to adjacent heavy industries that require thermal energy.
• Thermal Sinks – Using large bodies of water (lakes, rivers) for efficient heat transfer.
• Geothermal Integration – Leveraging the earth itself as a heat sink or a source of energy conversion.

Recent advances in drilling technologies and techniques, such as that being implemented by companies such as Eavor, has led to the advent of deep hole drilling (>2km) for the installation?closed-loop geothermal systems that enable electricity and heat generation at megawatt scales, without requiring water to be present in the subsurface. These systems can be leveraged to:

• Generate MW scale, reliable baseload electricity
• Dissipate excess heat into absorption chillers for cooling
• Provide district heating for municipalities or industrial processes
• Support aquaculture and industrial processes

In fact, we’re already seeing real-world examples of data centers leveraging thermal harvesting. In Paris, for instance, a data center’s waste heat is used to warm the Olympic Aquatics Center, creating an innovative relationship between digital infrastructure and urban sustainability.

The C-PACE Opportunity: Funding Onsite Energy Infrastructure for Data Centers

Now, I humbly admit that I do not know all the details of how a data center works, or whether data center engineers are laughing at the concepts I am presenting here or not, but I want to believe that there is some merit in the general concepts I am presenting here—enough so to continue the conversation. What I do know, however, is that the investment and development of $500 billion in data center infrastructure is going to benefit from every efficiency we can come up with to expedite our global race in this regard, including capital efficiency.

This is why I believe C-PACE and the associated structure of the financing mechanism has a natural place in this equation as a means of funding onsite energy infrastructure—arguably one of the larger line items for the development of this type of asset.

Lastly, I will point out that combining C-PACE with real improvements in data center energy efficiency, such as thermal harvesting, will undeniably qualify the entire project as a quantifiable Environmental, Social & Governance (ESG) investment. This opens up a much greater and more efficient pool of capital resources—resources that are actively seeking ESG-qualified investments.

A Call to Action

I don’t have all the answers, but I know the right questions to ask (even dumb questions lead to the right questions if you ask enough of them, right?!).

To push this conversation forward, fill in my knowledge gaps, and develop a strategic plan, I’m looking to assemble a small, diverse team of experts who can and is willing to openly explore this as a stakeholder group.?

If you’re in this space, particularly data center development, asset management, finance, mechanical engineering, energy infrastructure, geothermal, energy storage, or advanced cooling, let’s connect.

The future of AI depends on the future of energy infrastructure and capital, lots of it! And with the right solutions, we can build smarter, more resilient, and more sustainable data centers, and more importantly deploy capital into this space to create more jobs and economic development here in the United States.

Let’s figure it out together. In the mean time, Imperial Ridge Real Estate Capital is actively pursuing data centers for the placement of our C-PACE capital, so if you have a project, let's discuss!

Next Steps?

?? Interested? Let’s connect. ?? **Drop me a message or comment, let's hear everyone's thoughts!?