Microsoft’s engineering teams and a growing stable of partners have quietly moved from exploratory lab tests to concrete pilots that could fundamentally change how hyperscale computing is powered: instead of thicker copper and heavier busbars, entire power distribution trunks inside and around data centres may soon be made from high‑temperature superconductors (HTS) — cables that carry current with effectively zero electrical resistance when chilled to cryogenic temperatures. The promise is clear: dramatically higher power density, much smaller cable footprints, and far less heat dumped into server halls — a technical lever aimed squarely at the mounting “AI energy crisis” that is driving larger, hotter, and more power‑hungry data centre campuses every year.
AI training and inference workloads have pushed data centres toward unprecedented power densities. Racks that once drew a few kilowatts now routinely push into the hundreds of kilowatts; entire halls are designed to handle tens to hundreds of megawatts. That growth has exposed real constraints: utilities and permit authorities struggle to supply new long‑distance transmission and local substation capacity, towns resist new projects because of perceived impacts on local rates and water, and operators face a hard engineering limit on how much copper and aluminium infrastructure can be routed into a building without unbearable weight, space, and heat penalties.
Into that gap comes a dual technology and policy response. On the corporate side, Microsoft has rolled out a Community‑First AI Infrastructure framework that commits the company to avoid driving up local electricity bills, pay its own way on utility impacts, and invest in community benefits as it expands AI infrastructure. At the same time Microsoft has been backing and testing superconducting power delivery systems — most visibly through pilots run by VEIR, a Massachusetts‑based HTS startup — and coupling such pilots with long‑term energy commitments (including a power purchase agreement tied to experimental fusion projects). The result is a strategy that pairs an engineering pivot with a political and commercial play to reshape how AI is scaled.
Microsoft has already signalled its intent to buy future fusion‑generated electricity and has commercial arrangements that tie it to fusion projects with aggressive timelines. That helps justify early HTS investments: if demand from fusion and grid modernization pushes REBCO capacity higher, HTS per‑unit costs and lead times should come down.
This interdependence is a key reason a hyperscaler like Microsoft can credibly push the technology forward: it can be a first customer at scale for both fusion energy and HTS cable suppliers, lowering risk for manufacturers.
Key economic variables to track:
Public acceptance will depend on:
But the path is neither frictionless nor immediate. Cryogenic needs, new failure modes, supply‑chain concentration in critical precursors, standards and permitting gaps, and the need for integrated protection and operational models mean HTS adoption will be phased and targeted. Microsoft — with deep pockets, aggressive energy commitments, and a broad policy playbook — is among the few players who can underwrite the early risk and help create the market conditions for broader adoption.
For operators, policymakers and communities the sensible approach is twofold:
Source: LatestLY Microsoft Pledges To Rewire Data Centres With Superconductors To Resolve AI Energy Crisis |
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Background / overview
AI training and inference workloads have pushed data centres toward unprecedented power densities. Racks that once drew a few kilowatts now routinely push into the hundreds of kilowatts; entire halls are designed to handle tens to hundreds of megawatts. That growth has exposed real constraints: utilities and permit authorities struggle to supply new long‑distance transmission and local substation capacity, towns resist new projects because of perceived impacts on local rates and water, and operators face a hard engineering limit on how much copper and aluminium infrastructure can be routed into a building without unbearable weight, space, and heat penalties.Into that gap comes a dual technology and policy response. On the corporate side, Microsoft has rolled out a Community‑First AI Infrastructure framework that commits the company to avoid driving up local electricity bills, pay its own way on utility impacts, and invest in community benefits as it expands AI infrastructure. At the same time Microsoft has been backing and testing superconducting power delivery systems — most visibly through pilots run by VEIR, a Massachusetts‑based HTS startup — and coupling such pilots with long‑term energy commitments (including a power purchase agreement tied to experimental fusion projects). The result is a strategy that pairs an engineering pivot with a political and commercial play to reshape how AI is scaled.
What Microsoft has announced and what it actually means
- Microsoft has publicly signaled a program of research, pilot funding and strategic procurement to explore HTS for data‑centre power distribution. This activity includes funding and close collaboration with VEIR, which has demonstrated multi‑megawatt power delivery using superconducting cables in a simulated data‑centre environment.
- The company’s Community‑First policy pledges to pay full property taxes, avoid seeking local electricity rate discounts, and ensure its facilities do not raise household utility bills — a direct response to local opposition that has delayed or cancelled projects.
- Microsoft’s broader energy strategy is being layered in: the firm has existing agreements to buy future fusion power and is investing heavily in localized cloud infrastructure (including a multibillion‑dollar commitment to India), making HTS an option to reduce physical footprints while aligning with cleaner, higher‑capacity generation pathways.
The technology: what HTS cables bring to a data‑centre floor
How HTS works (short primer)
- High‑temperature superconductors like REBCO (rare‑earth barium copper oxide) become superconducting — zero electrical resistance — when cooled below a material‑dependent critical temperature. For many commercial HTS tapes that operating point is at or below liquid nitrogen temperatures (~77 K, roughly −196 °C).
- When superconducting, a cable can carry very large currents with negligible resistive loss. That means much smaller cross‑sectional area is required to deliver the same power compared to copper, and essentially no heat is generated in the conductor itself.
Demonstrated performance and claims
- VEIR’s “STAR” demonstration delivered roughly 3 megawatts through a single low‑voltage superconducting cable in a simulated data‑centre setup, claiming power density increases on the order of 10× compared with equivalent copper runs and very large reductions in routing footprint.
- VEIR and other developers describe HTS solutions that enable:
- Much shorter and lighter cable runs inside buildings.
- Lower internal heat generation from power distribution, reducing the load on facility cooling systems.
- Potential to route higher power to individual racks or rows without the mechanical and electrical complications of oversized copper busbars.
Engineering trade‑offs and the real operational challenges
Superconducting power distribution is powerful — but it is not a drop‑in replacement. The principal trade‑offs that engineers and operators must confront are practical, operational, and financial.Cryogenics and cooling overhead
- HTS materials require continuous cooling. For REBCO‑type tapes the working temperature commonly cited is around liquid nitrogen temperature (≈77 K, roughly −196 °C). That necessitates integrated cryogenic systems (liquid nitrogen jackets, refrigeration plants or cryocoolers) that must run reliably 24/7.
- Cooling systems themselves consume energy. The net energy benefit of replacing copper with HTS hinges on a balance: savings from eliminated resistive losses plus reduced HVAC load versus the electricity consumed to maintain cryogenic temperatures and the capital and operating cost of refrigeration and cryogen handling.
- Modern HTS system designers emphasize automated cryogenic management (sensors, redundancy, AI control loops). But even with automation, the cooling infrastructure is new territory for many data‑centre operators and changes failure modes and maintenance profiles.
Safety, failure modes, and protection
- Superconductors can “quench” — transition back to a resistive state under certain conditions (overcurrent, local heating, defects). When a quench occurs, the instantaneous heating and fault currents must be managed to avoid damage. That requires integrated protection systems and robust terminations where cryogenic conductor meets conventional copper.
- Cryogens bring safety and code implications (asphyxiation risk, pressurized vessels, transfer equipment), and local fire and building codes will need updates or clear precedents for widespread commercial deployments.
Interface complexity
- No single vendor yet sells a complete, field‑proven HTS distribution stack to mainstream data‑centre operators. VEIR and others position themselves as systems integrators: tapes, jackets, refrigeration, terminations, and monitoring integrated into a certified package.
- Transition boxes (cryogenic-to-conventional power bridges), fault‑current limiters and control infrastructure increase system complexity and will be the source of much early risk and cost.
Reliability and operations
- The data‑centre industry runs on five‑nines expectations. Any technology that introduces new maintenance windows, unusual spare‑parts regimes (cryocoolers, specialized tape), or unfamiliar operational procedures will face resistance until field data proves its track record.
Supply‑chain and geopolitical risk: the material side of superconductors
Superconducting tapes used for HTS power delivery are typically based on REBCO family chemistries (often referenced as YBCO, GdBCO, etc.). The manufacture of these tapes is a multilayer, capital‑intensive process that relies on chemical precursors and specialty substrates.- Global production of REBCO tapes is distributed across a set of specialized manufacturers in the U.S., Japan, Europe and China, but upstream processing for rare earths and many chemical precursors is highly concentrated.
- Rare‑earth oxides and separation — yttrium, neodymium, and similar elements used in some superconducting and magnetic materials — have a processing industry that remains heavily focused in China. That concentration introduces real strategic risk: pricing volatility, export controls, or rapid demand increases driven by fusion and other energy sectors could complicate supply and pricing for HTS tape.
- Microsoft and others are banking on two dynamics to ease this: (1) increased demand from energy and fusion projects will create scale and new investment into global manufacturing capacity, and (2) policy and supplier diversification efforts are accelerating outside China. Both are real forces, but they will take years to materially change the market balance.
How fusion, data‑centre demand, and HTS feed on one another
There is an important feedback loop in play. Fusion‑energy systems (and other high‑field magnets) also require large quantities of HTS conductor for magnets and power delivery. As fusion startups and research programs scale their manufacturing of HTS tapes, they create volume that can reduce per‑meter costs and encourage new fabs — which in turn benefits data‑centre uses.Microsoft has already signalled its intent to buy future fusion‑generated electricity and has commercial arrangements that tie it to fusion projects with aggressive timelines. That helps justify early HTS investments: if demand from fusion and grid modernization pushes REBCO capacity higher, HTS per‑unit costs and lead times should come down.
This interdependence is a key reason a hyperscaler like Microsoft can credibly push the technology forward: it can be a first customer at scale for both fusion energy and HTS cable suppliers, lowering risk for manufacturers.
Economic calculus: capex, opex, and the breakpoint for adoption
There is no single, public “price per metre” that determines the break‑even for HTS versus copper — variables include cable length, delivered current, rack and campus layout, electricity cost, local permitting and labour rates, and importantly the PUE improvements and reduced facility cooling needs.Key economic variables to track:
- Cost of REBCO tape and integrated cable systems — reductions here directly shrink up‑front capital barriers.
- Cryogenic system capex and lifecycle opex — refrigeration plant cost, maintenance, and energy consumption.
- Operational energy savings — lower resistive line losses and reduced HVAC load translate into lower energy bills over time.
- Grid interconnection costs and time to permit — if HTS can reduce the need for substation upgrades or long transmission builds, there is real economic value in timelines alone.
- Regulatory and compliance costs — permitting, safety systems, insurance and training are non‑trivial.
Alternatives and complements to superconducting rewiring
Superconductors are not the only path to addressing the AI energy crunch. Operators are pursuing multiple, often complementary strategies:- Improved server and GPU efficiency, model sparsity and software optimisations that reduce total compute energy per inference or training run.
- Onsite or nearby clean generation (utility PPAs, renewables, storage, advanced nuclear and fusion purchases) to avoid grid congestion and reduce carbon footprints.
- Distributed DC power architectures and higher‑voltage DC distribution inside buildings to reduce conversion losses.
- Enhanced busbar systems, better copper alloys, or liquid‑cooled power distribution that increase density without cryogenics.
- Demand management and scheduling of AI workloads to match available local carbon‑free generation windows.
Policy, permitting and community dynamics
Microsoft’s Community‑First commitments are instructive here. Rewiring a data centre to use HTS could actually reduce a facility’s visual and land footprint, shorten transmission corridors and minimize grid upgrade costs — all arguments that make permitting easier. But HTS introduces new local impacts: cryogenic plant safety, liquid nitrogen handling and potentially visible mechanical plant that communities must understand and trust.Public acceptance will depend on:
- Clear safety standards and codes for commercial cryogenic electrical distribution.
- Transparent disclosure of how HTS affects local electricity demand and bills.
- Demonstrable reliability and a track record of safe operation in pilot projects.
Timeline: what to expect and when
- Short term (2025–2027): pilots and aisle‑level demonstrations inside controlled environments; small commercial pilots with integrated cryogenics; suppliers scale pilot production of REBCO tapes.
- Medium term (2027–2030): first limited commercial rollouts in power‑constrained campuses, validated terminations and protection schemes, standards begin to emerge; manufacturing scale begins to reduce tape prices.
- Long term (2030+): wider adoption where supply chains and standards support mass deployment; complementary markets (fusion, grid HTS) create sustained demand and further cost reductions.
Final assessment: bold promise, complex reality
High‑temperature superconducting power delivery is a game‑changing engineering idea for the AI era: by reducing resistive losses and dramatically shrinking power‑distribution footprints, HTS can unlock denser data centre designs and relieve grid and siting pressures that are becoming politically and economically binding.But the path is neither frictionless nor immediate. Cryogenic needs, new failure modes, supply‑chain concentration in critical precursors, standards and permitting gaps, and the need for integrated protection and operational models mean HTS adoption will be phased and targeted. Microsoft — with deep pockets, aggressive energy commitments, and a broad policy playbook — is among the few players who can underwrite the early risk and help create the market conditions for broader adoption.
For operators, policymakers and communities the sensible approach is twofold:
- Track pilot results closely and demand transparent, independently audited performance and lifecycle analyses that include cooling energy, reliability metrics and safety records.
- Support diversified domestic manufacturing and recycling of critical rare‑earth and superconducting materials so supply shocks or geopolitical moves do not bottleneck a strategic technology.
Source: LatestLY Microsoft Pledges To Rewire Data Centres With Superconductors To Resolve AI Energy Crisis |
LatestLY