The world’s largest asset manager, BlackRock, is the latest major company to sound alarm bells about the need to invest heavily in energy and other infrastructure if soaring demand from the growing data centre sector is to be met – growth that BlackRock itself aims to support by seeking to mobilise billions of dollars of investment.
Brad Kim, BlackRock’s head of Asia Pacific diversified infrastructure told a media briefing in late September that data centre growth would drive a 50% increase in overall energy consumption across Asia Pacific in the next 10 years and that water infrastructure would need to almost double over the next five years to support cooling technology for data centres.
“The need for data centres over the next five years is going to be double what is currently in the markets,” he said, according too Bloomberg.
The warning chimes with those from others. The International Energy Agency said in its Electricity 2024 report, published earlier this year, that global electricity consumption from data centres, artificial intelligence (AI) and the cryptocurrency sector could double by 2026.
Global partnership with Microsoft, MGX
BlackRock is part of a consortium of financial institutions and tech players attempting to mobilise the massive amounts of private investment needed to fund both data centre expansion and the associated infrastructure.
The asset manager said in mid-September it was creating a “Global AI Infrastructure Investment Partnership” with Global Infrastructure Partners (GIP), Microsoft, and Abu Dhabi-backed technology investor MGX to fund data centres, as well as infrastructure required for the new sources of power required for these facilities. Nvidia, the world’s largest computer chipmaker, is also supporting the partnership with its AI expertise.
The partnership would initially seek to “unlock $30bn of private equity capital over time from investors, asset owners, and corporates, which in turn will mobilise up to $100bn in total investment potential when including debt financing”, the partners said. Most of these infrastructure investments will be in the US, with the remainder to be invested in what the group calls US partner countries.
Larry Fink, BlackRock’s Chairman and CEO said mobilising private capital to build AI infrastructure such as data centres and power supply would unlock a multi-trillion-dollar long-term investment opportunity. “Data centres are the bedrock of the digital economy, and these investments will help power economic growth, create jobs, and drive AI technology innovation,” he said.
Brad Smith, Microsoft Vice Chair and President, said private investment was key to the future AI development. “The capital spending needed for AI infrastructure and the new energy to power it goes beyond what any single company or government can finance,” he said.
Some energy industry players have said increased demand from AI-driven applications provides an opportunity to extend the life of the hydrocarbons industry, though the IEA has said it remains uncertain how this will impact oil and gas demand, given the rapid growth of renewable energy. Also, as Goldman Sachs recently reported, the AI era may prove to be a mixed blessing for oil producers, once all the impacts, both positive and negative, are weighed up.
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