AI data centre frenzy risks power shortage, major global investor says
Blackstone is making big bets on the explosive global demand for data centres fuelling the artificial intelligence boom, but co-founder Steve Schwarzman warns that failure to increase electricity supply at a similarly rapid pace will result in power shortages across countries.
The world’s largest private equity firm is seizing opportunities promising “amazing” and consistent returns of about 20 per cent over multiple decades into the future, Mr Schwarzman said Tuesday.
“Talk about an investment opportunity that nobody ever thought about,” he told the Asia Pacific Financial and Innovation Symposium.
“You’ll be able to create 20 per cent returns doing these data centres – 20 per cent returns with 30 year contracts. Wow – this is pretty amazing,” he said.
As the foundation enabling today’s digital world and powering generative AI, data centres have become a critical infrastructure. Big tech comwould panies and other investors are racing to rapidly build larger and more powerful data centre facilities.
The development rush and investment in the sector doesn’t come without challenges. Mr Schwarzman said the electricity needed to run these centres is so high that it likely mean countries will run out of electricity.
“The amount of electricity that these data centres use is exceptionally high. And so what we’re finding is that different states in the US are starting to run out of electricity,” he said.
The demand for power in the mature industrial countries is about 1 per cent per year. But the artificial intelligence boom is likely to turbocharge that growth, adding between 2 percentage points to 3 percentage points more growth every year.