Ag-Grid Energy Proves Dairy Biogas Systems Can Directly Electrify Edge Data Centers
Innovative solutions and government support are urgently needed to power the explosive growth of AI without crippling the electricity grid, driving up energy costs, reversing progress toward environmental sustainability, and leaving rural America further behind. A small biogas business in Pennsylvania is stepping to the forefront by demonstrating a key part of the solution and calling out the policy changes required to support it.
Ag-Grid Energy creates reliable, renewable energy with positive environmental impacts in partnership with family-owned dairy farms in seven states. Since June 2019, Ag-Grid dairy biogas-to-electricity projects have been generating revenue by selling credits or entering power purchase agreements on the grid. That’s the traditional model for monetizing renewable energy.
One year ago, Ag-Grid Energy began piloting a new distributed generation model. A biogas system on a dairy farm in rural New York started providing electricity directly to a digital business: a 1MW crypto mining unit, which is nearly identical to an AI data center in its need for continuous, power-intensive computing and cooling. This pilot is a crucial proof of concept that the Ag-Grid system – based on anerobic digestion of cow manure and food waste – can meet part of the electricity demand for AI infrastructure in rural areas.
Based on the pilot’s success, Ag-Grid Energy Founder & CEO Rashi Akki has formed a sister company, Ag-Grid Digital, to develop dairy biogas projects that directly power digital businesses. “This distributed generation model enables us to bypass some of the timelines and costs associated with grid interconnection, offering faster deployment, with projects potentially up and running in just 2–4 years,” Akki said.
Aligned with Responses to the AI Electricity Challenge
The urgency to act on AI electricity needs stems from three trends that are unsustainable: increasing strain on the power grid, increasing energy costs for businesses and consumers, and increasing use of fossil fuels that pollute the atmosphere. In demonstrating and urging appropriate action, Ag-Grid Digital is aligned with the international “Green AI” movement to reduce AI’s environmental footprint.
Ag-Grid Digital is also aligned with efforts to develop small, modular “edge” data centers that reduce latency by locating computer servers closer to end users. This distributed computing model is a much-needed adjunct to the massive, centralized 50MW data centers required by AI technology giants and cities where demand is high. The electricity needs of edge data centers typically fall within the 1MW to 5 MW range – a perfect match for the output of current biogas systems. Building an edge data center close to a biogas power source reduces the physical distance that electricity must travel over wires, improving energy efficiency.
A third way in which Ag-Grid Digital aligns with emerging responses to the AI electricity challenge is meeting the need to serve rural communities historically underserved by technology. U.S. Representatives Jim Costa (D-CA) and Blake Moore (R-UT), whose districts include large rural areas, have introduced the bipartisan Unleashing Low-Cost Rural AI Act (H.R. 5227) to study the impact of AI data centers on rural areas. In a related initiative, the American Hospital Association is exploring how AI, potentially supported by distributed energy resources, can address healthcare challenges in rural areas.
How Dairy Biogas Works and Its Potential to Scale
Ag-Grid Energy’s pilot project in Cohocton, NY, is a partnership with Lent Hill Dairy Farm owner Paul Wolcott. Lent Hill Ag-Grid consists of two anaerobic digesters that recycle manure from 4,000 cows and 45,000 gallons per day of food waste locally sourced from food processing plants, grocery stores, and restaurants.
Essentially a large, sealed tank with a domed top, a digester keeps oxygen out while it mixes manure and food waste at optimum temperatures to support the natural process by which bacteria breaks down organic matter. The end products are biogas used to generate clean energy and a nutrient-rich digestate useful as organic fertilizer for the crops dairy farms grow to feed their cows.
The environmental benefits include capturing methane from manure, thereby preventing this potent greenhouse gas from being released into the atmosphere, and diverting food waste from landfills. The anaerobic digestion process is carbon negative and contributes to a more circular and regenerative agricultural system.
According to the American Biogas Council, there were 471 operational dairy biogas systems as of June 2025. These systems are technically feasible for over 8,000 large dairy and hog operations, according to the U.S. Environmental Protection Agency’s AgSTAR program. In addition, as Ag-Grid Energy has proven, many thousands more small and medium size farms can support biogas systems by supplementing manure with locally sourced food waste.
This untapped potential represents a scalable resource for meeting the growing power needs of the digital age. An added benefit is that partnership in a revenue-generating biogas project offers a financial lifeline to family-owned farms facing economic pressures.
What Government Must Do to Support Biogas Investment
While clean, renewable energy from biogas has obvious benefits, scaling a distributed biogas model is not economically feasible without government support through tax credits and long-term contracts. For that reason, an important part of the Ag-Grid Digital mission is advocacy. “Starting here and now, we are calling out the policy changes that are required to make farm-based biogas-to-electricity projects part of the solution to our nation’s AI power needs” Akki said.
As a first step, Ag-Grid Digital is urging policymakers to amend Section 48E of the Inflation Reduction Act (IRA). Under Section 48E, the IRA created a new, technology-neutral Clean Electricity Investment Tax Credit for projects placed in service after 2024. However, final regulations issued by the Treasury and Internal Revenue Service failed to include anaerobic digesters and similar systems as part of the eligible investment.
“Amending Section 48E to fully include anaerobic digesters and associated infrastructure would send a clear signal to the market and accelerate investment in biogas-to-electricity projects,” Akki said.
Beyond this specific policy change, Ag-Grid Digital is asking people inside and outside the biogas industry to look at the big picture, Akki added. “Government policymakers, even those who deny climate change, have a vested interest in supporting the development of distributed renewable energy sources for AI data centers in rural areas. It will alleviate pressure on the power grid, mitigate rising electricity costs, and enable rural America to access the benefits of AI.”