AI’s voracious appetite is straining energy grids, prompting new power strategies and longer planning horizons
In sum — what to know:
A gating factor: Power is now the biggest gating factor for AI infrastructure, with water to follow next.
Bring your own power: To avoid grid struggles, business must consider adopting bring your own power (BYOP) strategies which involve tapping into multiple energy sources, years in advance.
Nuclear power, a distant solution: CEO of DigitalBridge notes that nuclear power as an alternative energy source for AI remains years away.
AI infrastructure is at a crossroads. While on one hand demand for infrastructure is growing at a manic speed, power constraint is choking structural expansion plans.
That’s the message that came from Marc Ganzi, CEO of DigitalBridge — an asset management firm in the digital infrastructure space which was acquired by SoftBank late last year — at Metro Connect USA in Fort Lauderdale.
Speaking at the keynote, Ganzi said, “To enable AI, we all know the cliche is, power availability becomes the currency. That’s really the currency that’s driving critical workloads, that’s driving new data centers, and ultimately drives an ecosystem that feeds off of those data centers.
While there is a lot of free land, he reminded that land without power is of no value, nor a “will-serve” letter from an utility provider stating that it has capacity and intent to supply service.
“A will-cert letter does not mean you have a connection date,” he said, noting that developers today are looking at connection dates between 2030 and 2032.
He said that gaining access to energy is now a power play which really comes down to how politically connected one is in that state.
He argued that it essentially makes the digital infrastructure business more like power enablement business, where, to sidestep state-level politics and long grid queues, developers must orchestrate grid-independent power, micro-grids and multi-source energy strategies as a core part of their business model. Now popularly called bring your own power (BYOP), the strategy promotes onsite power generation over reliance on public grids.
Ganzi reminded that the power problem is here to stay. The industry currently leases 12 gigawatts of power every year, while adding four gigawatts of incremental capacity.
“You guys can do the math,” he said. “We have a deficit of power,” adding that the gap will only widen in the coming years.
And as the energy discourse turns towards nuclear power as an alternative source that can meet AI’s appetite for “baseload” power, Ganzi’s message was blunt but clear: “We don’t believe that magically 40 to 60 gigawatts of nuclear power is going to show up in eight years. It’s not.” He added that it will take another decade and then some years for it to pan out practically.
“If we’re all hoping for some magic bullet to save the power problem, I’m here to tell you it’s not going to happen,” he emphasizes.
With the data center industry already facing public backlash from local communities for building projects in their backyards, Ganzi predicted that the next challenge will be water.
“The next page to turn is the sector is going to be hit hard with water. We’ll have to defend our water usage.” He noted that it is pressing on the industry to design water cooling systems that require no loss of water, adding that work is already underway.
Ganzi urged the industry to think in longer timelines and planning horizons. He recommended a 36 to 48 month build cycle instead of a five-year model, and advised companies to start planning to solve tomorrow’s power supply issues today with several years of time on hand.
“That’s the mentality you have to have for success…The opportunity is huge. The challenges are different. Every year the chessboard changes, and it’s a lot of fun,” he concluded.
