Data centres are sleeping giants and AI is making them wake up hungry
eature: It’s onward and upwards for data centres, a property asset class that has exploded in energy consumption and investment value. At the same time, it’s a sector that supports almost every aspect of daily human life, according to Cushman and Wakefield’s Alex Moffatt.
Data centres have traditionally been identified by giant, unmarked and windowless concrete boxes. Big providers like XDC+ are now starting to unabashedly signpost their centres with its bright red logos.
That could have something to do with the need to signpost “sustainable” energy-sharing precincts that have the data centre at its front and centre, according to industry observers who attended the Sydney Cloud & Datacenter Convention earlier this year.
- Read more about energy sharing precincts in TFE’s special report from our Festival of Electric Ideas
According to Alex Moffatt, Cushman and Wakefield’s Australian lead on the APAC data centre advisory team, the sector itself is now massive, both in terms of asset and energy consumption.
In an interview with The Fifth Estate, He said,
It’s gone from a $300 million asset to a billion-dollar asset and is only increasing in scale. They were 30 megawatts-hour, but now they are 100 megawatts plus [- hour].
“People are starting to realise what data centres are, but many people don’t really grasp the connection between them and everything you do on your smartphone. It’s very rare that what you are doing, aside from taking photos, is happening in the phone – even Spotify and Netflix are all streamed and stored – and the energy usage would be massive.”
In the Australian market and the Asia Pacific market in general, that’s
Two and a half times growth between 2023 and 2030.
Data centres may be giant, multi-billion dollar projects, but there are as many opportunities as there are risks,
Moffatt said,
You’ve got an asset class that’s just exploded in scale, much higher value buildings and a competitive landscape; you have to find the land first in the right location with power as well as everything else; the right zoning, then you’ve got to find the capital to build them. So, it’s becoming a very competitive space but a huge capital intensive space as well.
The Australian Energy Market Operator’s integrated system roadmap for the energy transition labelled data services as a big opportunity for exporting data processing services.
The Goodman Group is one giant company that has recognised this potential
Billionaire and owner of the group Greg Goodman recently told The AFR that in the past 12 months, the business has pivoted quickly to the “next big property boom” – data centres.
Driving the growth are tech giants such as Google, Microsoft and Amazon, which are rapidly upscaling in capacity when it comes to the energy guzzling artificial intelligence and cloud computing.
In August last year, Goodman unveiled plans to develop three to four gigawatts of these facilities across its portfolio, initially valued at around $30 billion each once developed, Goodman said in the interview.
He said his company was now delivering fully operational centres instead of a “powered shell”, adding more value to the product.
Around 50 per cent of the company’s $12.8 billion pipeline of work would soon be data centres.
But what about the carbon challenges?
While some owners are tracking operational carbon emissions, the job for renewable energy and carbon offsets is enormous, with even multimillion-dollar conglomerates like Google struggling to keep up with offsetting the greenhouse gasses generated by the increasing use of AI by both businesses and consumers.
In the latest version of the Australian Energy Market Operator’s integrated system roadmap for the energy transition, chief executive Daniel Westerman said that as “Australia’s coal-fired generators are reaching the end of their service life…investment is urgently needed” to meet Australia’s growing demand for electricity.
Moffatt says that while data centres are doing their best to “source green electricity where they can”, whether it is through wind farms or solar, there was no realistic way to track individuals’ and households’ usage of data and correlating carbon footprint, putting the entire onus of the offset on the data centre owner.
Some data centre owners also have green power procurement plans in place, which we are starting to see more of due to rising pressure.
But in some cases, the data centre can’t actually buy enough green power because there’s not enough green power to go around.
Office and commercial buildings, however, “are a bit easier to track”, although it would be harder to differentiate what was used to process data compared to that of the consumption of IT and software.
Moffatt says that to his knowledge, no property owners are tracking the carbon emissions incurred by the data processing its office or building is using in its operational carbon.
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Data centres are sleeping giants and AI is making them wake up hungry, source
