The accelerating AI boom has created a further surge in demand for data centres which have now become the hottest properties in commercial real estate. It is reported from the USA that four firms are predicted to spend more than $US600 billion ($AU964 billion) this year alone on AI infrastructure, mostly on data centres.
Jared Cohen, president of global affairs at investment bank Goldman Sachs suggested that the unprecendented level of demand may under-represent the true scale of investment: “Those numbers are probably already conservative … When we talk about AI, we just continue to underestimate the scale … We’ve never had this much money deployed in such a short period of time.”
Major investors gathered in New York heard that Australia was the ideal “overflow option” for American technology companies currently looking to invest unprecedented amounts of money in AI infrastructure. AI and cloud computing require networks of large data centres which consume considerable amounts of energy, water and other resources through the course of their life. The article indicates there are around 8000 data centres globally of which half are located in the USA but there’s insufficient powered land to keep pace with the USA’s projected infrastructure needs.
As Cohen pointed out at a recent summit on US-Australia investment hosted by the Australian Consulate-General in New York: “If the US wants to continue to dominate, it’s going to need some kind of overflow option”. The previous American administration identified 18 countries including Australia, the UK and other European allies, Japan and Canada as Tier 1 partners. These countries are able to access advanced US technology with few barriers.
Yet it is not all smooth sailing for Australia in terms of sharing in the hundreds of billions of dollars of US artificial intelligence investment. There may be roadblocks. Ryan Brown, head of Infrastructure finance at OpenAI, the company behind ChatGPT, suggested that restrictive copyright and data privacy laws meant that companies might need to look elsewhere. Brown identified changes to legislation on ‘data privacy and misuse’ in Australia as creating uncertainty as to what ‘misuse’ is, how it is categorised and the requirements that are attached to it.
The changes in geopolitical strategy that the Trump administration will bring may also impact Australia particularly if the administration uses the promise of top tier status and access to US technology as a bargaining position with other nations.
The recent warnings come as both the NSW and Victorian governments compete for overseas investment, particularly for the energy/resource-intensive data centres that will house the next generation of cloud computing and artificial intelligence.
The Australian investment case may be weakened by slow and unwieldy planning systems. It is reported that NSW Treasurer Daniel Mookhey has identified dozens of private sector investment proposals that would boost the state’s productivity – those in the top 25 are overwhelmingly energy or data centre proposals.
“We need to get these new industries that are making generational-changing investments through our system faster,” he said.
