New data centres mean surging power needs

Now the advent of generative AI, which was publicly pioneered by the stunning release of ChatGPT a year ago, is further transforming the complex dynamics of matching power supplies with demand for data.

Big data centres that had required 10 megawatts, perhaps up to 20 megawatts, of electricity to send and receive data on their hundreds of servers and routers can no longer keep up with what is needed to meet that soaring demand.

This will require more like preparing for 100 MW to 300 MW of electricity to be available in each large facility – and only ever escalating.

It means an urgent push in many countries to build ever-more, ever-larger data centres with their physical infrastructure of land, buildings, water and energy. AustralianSuper, for example, has just invested $2.5 billion for a minority stake in Vantage Data Centres, a major developer in Europe and the US.

In Australia, Microsoft certainly isn’t the only major international tech player building or leasing more data centres. Amazon Web Services announced in April it would invest over $13 billion in new data centres here to fuel its cloud computing business over the next five years. Google has opened “cloud regions” with leased data centres in Sydney and Melbourne.

Then add in the remarkable growth of existing, well-regarded domestic operators such as NEXTDC and CDC Data Centres, founded in Canberra in 2007.

But modern commitments to steadily reduce carbon emissions and increase the use of renewables also make managing energy needs even more complicated for all these data centres.

Microsoft, for example, is pledged to be carbon-negative globally by 2030. In other countries, its energy emissions reduction policies include investing in renewables such as pumped hydro as well as solar power and investigating the potential use of small modular nuclear reactors.

In Australia, Microsoft’s carbon offsets have been largely limited to investments in solar power.

But the Australian grid’s increasing bottlenecks has translated into higher power costs combined with reduced reliability, leading to the system’s regulators sometimes asking data centres at peak times to reduce their electricity use in favour of diesel generators. That’s another reason Microsoft preferred to rely on data centres in India and the US to process most of the Australian public’s increasing need for data, in the form of streaming content or other personal uses created by generative AI.

It tended to save the higher-security, higher-speed, higher-capacity resources from the 20 Australian data centres it owns or leases to meet the stricter requirements of Australian governments and corporates.

But under the deal announced this week, Microsoft will also increasingly expand the public’s connections to data centres based in Australia as well as beefing up capacity and security for governments and corporates.

That is on the assumption the country’s power supply, including renewables, also steadily increases to match the dramatic growth of computing capacity of Microsoft’s domestic data centres – up by 250 per cent within two years.

Microsoft data centres in Australia will increase to 29, including another three being built in Sydney, three in Melbourne and expansion across Canberra and other locations.

Several are already under construction, with the first to be completed early next year. The need to quietly secure land and construction timetables well before Microsoft’s intentions became public meant this process began more than a year ago – along with discussions with the federal government.

Australia is already a strong market for Microsoft and its Azure cloud platform. It is nearer to parity with rival Amazon Web Services than it is globally, despite the 28 per cent jump in Azure’s cloud business as part of Microsoft’s quarterly results this week.

But Seattle’s willingness to make a $5 billion investment was also encouraged by AUKUS undertakings to facilitate exchanges of advanced security, defence and information technology between the US and Australia. As well as expanding cloud computing and AI investment, Microsoft is collaborating with the Australian Signals Directorate on a “cyber shield” to improve protection against cyberattacks. It is also investing in more digital skills training for hundreds of thousands of Australians, including a new partnership with TAFE NSW.

This demonstrates some of the challenges to come in the fast-changing digital world of data. Now to secure the affordable, reliable, renewable power for it all.