A new industry is booming in Malaysia, as the state of Johor becomes a hub for data centers powering generative AI. Microsoft has committed over $2 billion to one such project, highlighting the growing need for cheap and reliable power. As AI applications proliferate, tech firms are searching for energy sources globally, with nations competing for their business.
The demand for power is increasing, with state-of-the-art AI data centers requiring massive amounts of electricity – up to 10 gigawatts. Nations like Ireland and Singapore have seen their capacity strained due to the growing interest, creating opportunities for new competitors in countries such as Malaysia, Indonesia, Thailand, Vietnam, and Chile.
Low-cost energy has become a priority for companies, with locations near reliable power sources becoming crucial. Cooler climates or coastal areas are in demand as potential sites, as half of the energy cost in data centers comes from cooling systems. However, this trend is putting pressure on local economies’ decarbonization targets.
Countries are competing fiercely for data center business, with tax breaks and incentives being offered to attract operators. In Malaysia, expedited construction approvals are also being made available to fast-track power lines for data centers.
The shift in global influence is underway, with data centers becoming the new geopolitical hot spots. However, nations should be wary of their advantage being fleeting, as dominant economies figure out how to bring cheap and clean power online.
Ultimately, transforming this advantage into a sustainable edge requires building enduring innovation ecosystems that can thrive long after the “electricity rush” subsides.
Source: https://www.wired.com/story/big-tech-data-centers-cheap-energy