Brazil state development bank mulls AI, data center-focused investment fund
The fund, which would be part of a broader BNDES initiative to resume investments in equities, could receive an allocation ranging from 500 million reais to 1 billion reais ($91.93-183.86 million), he added.
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How Big Tech plans to feed AI's voracious appetite for power
AMERICA'S tech giants are masters of the digital realm. Yet, as they bet stupendous sums on artificial intelligence (AI), their ambitions are facing constraints in the physical world. Shortages of chips and data-centre equipment such as transformers and switching gear mean soaring prices and lengthy waits. Just as pressing is access to energy, as utilities struggle to match the demands of Silicon Valley. Last week, US President Donald Trump published an 'AI action plan' which describes America's stagnating energy capacity as a threat to the country's 'AI dominance'. How is Big Tech coping with a worsening power crunch? Demand is rocketing thanks to ever more ambitious AI plans by the hyperscalers – Alphabet, Amazon, Microsoft and Meta – all of which rely on data centres to run their services. On Jul 23, Alphabet, the owner of Google, said it would increase its capital spending for 2025 by US$10 billion to US$85 billion, taking the expected combined total for the hyperscalers to US$322 billion this year. This is up from US$125 billion four years ago, as they splash out on bigger and more power-hungry data centres. Mark Zuckerberg, Meta's boss, recently unveiled Project Prometheus, a cluster of such centres in Louisiana covering an area almost the size of Manhattan. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up New facilities consume more electricity than ever. A rack of servers stuffed with AI chips requires about 10 times more power than a non-AI version a few years ago. A study by the Lawrence Berkeley National Laboratory found that in 2023, US data centres used 176 terawatt-hours (TWh) of electricity. ' Hyperscalers are also playing more of a role in directly commissioning power projects. That not only includes striking deals directly with power firms, but also building generation capacity at data centres to reduce reliance on grid connections. ' That is forecast to increase to between 325 TWh and 580 TWh by 2028, or 7 to 12 per cent of America's total consumption, with hyperscalers accounting for about half. The situation is further complicated by the shifting requirements of AI. Most of the computing power now trains AI models. As the technology is adopted more widely, more of it will be used for inference, when an AI system responds to a query. To speed up responses, many in the industry argue that inference data centres need to be near where people are using the software. But available land and power are even harder to find near cities. Already overloaded Faced with a power shortage, America's tech giants are turning to 'less than ideal places', says a former executive. Many of the preferred places, such as North Virginia, with favourable tax regimes and proximity to high-capacity fibre-optic cables that ferry data around, are already overloaded with data centres. Yet, even the new spots, such as Hillsboro, Oregon, and Columbus, Ohio, are becoming 'capped out', explains Pat Lynch, executive managing director of data centre solutions at CBRE, a property firm. Vacancies are near an all-time low, and centres due for completion in 2028 are already fully booked. Another strategy is to team up with smaller rivals. In June, Google announced that it would rent data-centre capacity from CoreWeave, an AI cloud provider which has already signed a similar five-year US$10 billion leasing deal with Microsoft. Part of the capacity for such 'neoclouds' comes from repurposing facilities once used to mine cryptocurrencies. Tech firms are also scouring the land for fresh sources of power. Amazon Web Services planned to buy and develop a nuclear-powered data centre from Talen Energy, an electricity generator. The deal was blocked by regulators for fear of raising locals' bills. On Jul 15, Google announced a US$3 billion deal for hydropower from a dam in Pennsylvania. Hyperscalers are also playing more of a role in directly commissioning power projects. That not only includes striking deals directly with power firms, but also building generation capacity at data centres to reduce reliance on grid connections. A survey by Bloom Energy, a power provider, finds that data-centre bosses expect that 27 per cent of facilities will have onsite power by 2030, whereas last year that share was only 1 per cent. ' A final strategy is to go abroad. Data centre capacity is set to soar in the Gulf countries, where big sovereign-wealth funds are bankrolling developments. ' Google signed a US$20 billion deal in December with Intersect Power, a developer, to build a data centre and solar farm with battery storage. Some of the power for Meta's Prometheus will come from natural gas extracted at the location. The hyperscalers' desperation is helping cultivate novel sources of generation. Google has an agreement with Kairos Power, a startup developing small-modular reactors (SMRs), to provide nuclear power from 2030. Amazon has invested in X-energy, another SMR startup. Google and Meta have signed deals for geothermal energy, tapping the heat from the earth's crust. Microsoft is dabbling in hydrogen fuel cells as backup power for data centres. Extremes in demand Making the grid more flexible is another way to ensure reliable supplies of energy. Tyler Norris, a fellow at Duke University, says electricity systems are designed for extremes in demand. A hot and sunny morning in Texas, say, will send people rushing to switch on air-conditioning units. If data centres agree not to use grid power at peak times by tapping batteries or using onsite generators, that can allow more to be added to the grid without overburdening it. Data-centre operators that do this could get priority in the queue for power from the grid. XAI, owned by Elon Musk, participated in a flexibility programme for its data centre in Memphis. SemiAnalysis, a research outfit, argues that this helped it get faster access to electricity. The tech giants are providing support in other ways, too. Google has teamed up with CTC Global, a cable-maker, to help utilities and states upgrade transmission lines. ' Malaysia had been Asia's data-centre hot spot, thanks in part to cheap energy, though a surcharge for data centres which came into force on Jul 1 may put off the hyperscalers. ' A final strategy is to go abroad . Data centre capacity is set to soar in the Gulf countries, where big sovereign-wealth funds are bankrolling developments. Spain, with its abundant solar power, is another popular destination. Malaysia had been Asia's data-centre hot spot , thanks in part to cheap energy, though a surcharge for data centres which came into force on Jul 1 may put off the hyperscalers. Making the right choice is crucial. Building huge data centres can run into trouble. Project Stargate, led by OpenAI, an AI startup, and SoftBank, a giant Japanese tech investor, has reportedly hit setbacks after disagreements about power providers and site selection. Peter Freed, an executive formerly at Meta and now a consultant, notes that building highly customised data centres for training models in the middle of nowhere may prove a bad idea. 'I worry about stranded-asset risk,' he says. And as no one knows what the demand for AI will be over the next two years, even the most advanced AI model might struggle to give definitive advice. ©2025 The Economist Newspaper Limited. All rights reserved
