The Infrastructure of AI: Power Needs

The Infrastructure of AI Power Needs webcast hosted by CBRE Investment Management covered significant aspects of powering data centers, particularly amid the AI revolution. Scott Silverberg, the moderator, alongside experts Kleber Costa of AES Clean Energy, Jeff DeBlock and Dan Foley of CBRE IM, discussed challenges, solutions and future prospects in the data center energy market. The conversation highlighted the growing demand for power in data centers, driven by the increased use of AI and cloud computing. Experts emphasized the need for a mix of renewable energy sources and grid power, the potential role of nuclear energy and the importance of innovation and local permitting in addressing future energy demands. Key takeaways included insights into the current state and future outlook for data center power needs, investment opportunities and the critical role of reliable partnerships.

Key Points

Growing demand for power: Data centers are experiencing an explosive demand for power, particularly driven by AI and cloud computing. This demand is expected to result in a significant shortfall by 2028 if current growth rates continue.

Energy sources: Reliable and renewable energy sources are critical. Hyperscalers are increasingly seeking cleaner, more sustainable power solutions despite the challenges.

Role of nuclear energy: Small modular reactors (SMRs) and existing nuclear plants present potential solutions, but their widespread adoption is seen as a longer-term prospect.

Grid dependency and onsite power: While grid power is preferred, the latency in developing grid infrastructure necessitates consideration of onsite power generation. The balance between these two will be crucial in the coming years.

Innovation and sustainability: Innovation in energy solutions and a focus on sustainability are essential for meeting the growing power demands of data centers.

Local permitting challenges: Local permitting and opposition present significant challenges to developing new power infrastructure. Federal policies have limited influence over these local issues.

Investment opportunities: The transition to renewable energy, the build-out of the grid, and potential in nuclear energy offer significant opportunities for investors.

Takeaways

Immediate needs and future planning: Current data center power needs are being met, but future demands require significant planning and investment, particularly in renewable energy sources and grid infrastructure.

Importance of trusted partnerships: Reliable partnerships with energy providers and innovative solutions are crucial for data centers to ensure a stable power supply.

Risks and opportunities: Potential risks include overbuilding and misprojecting load demands, while opportunities lie in investing in renewable energy, nuclear power and grid infrastructure.

Local and federal roles: Local permitting issues are a major hurdle, and grassroots work at the local level is critical for advancing energy projects. Federal policies like the Inflation Reduction Act provide some support but are limited in their reach.

Future outlook: The next five to 10 years will see significant growth and transition in the data center energy market, with a focus on sustainability and innovation being key to success.