Our Take, With Doug Sheridan
“Hold on to your wallet. We have under-invested for so long in the kind of 24/7 generation assets needed to serve these data centers that electricity prices can't help but rise...likely precipitously”
Our Take, With Doug Sheridan
Per the Australian, Blackstone, the world's largest private equity firm, is seizing opportunities to build data centers for AI and other digital services. The opportunities are promising "amazing and consistent returns of about 20% over multiple decades into the future", Schwarzman said.
"There is an explosion going on in the building of data centers said Schwarzman. "This is like something I've never seen. Talk about an investment opportunity that nobody ever thought about. You'll be able to create 20% returns doing these data centers with 30-year contracts. Wow, this is pretty amazing, it's amazing," he said.
As an example, Schwarzman said Blackstone's investment in US data center operator QTS Data Centers, which it bought for $10B in 2021, had grown over six times. Blackstone is now the largest builder of data centers powering AI in the US, and Schwarzman expects growth at QTS will accelerate by "another few times."
Once QTS projects are complete, they will tap into 6 GW of electricity. "The amount of money that's being invested in this area is breathtaking, and it's happening now all over the world. And one of the things that I never considered is that in most countries, they're going to start running out of electricity."
Our Take 1: We're pretty sure we've seen this movie before, and it doesn't end well for the doe-eyed environmentalists and youth activists who had their hearts set on mankind choosing lower energy usage—and the reduced living standards that come with it—over economic growth and advancement.
Our Take 2: Watch closely how the data-center buildout opportunity is handled in the investment world. The same persons and organizations lecturing us only a few years ago on the necessity of embracing ESG, stakeholder capitalism and "responsible tech" will play an integral role in the expansion of energy, emissions, and artificial intelligence on a scale beyond what anyone previously imagined.
Our Take 3: Here's how Wall Street and tech companies will frame (ie, justify) these data center investments...
"In the long run, we'll see emissions and energy usage rise as we build out the foundation for a robust AI and digital infrastructure that will eventually position us to solve the world's most complex issues more rapidly and justly."
See how it works?
Our Take 4: Hold on to your wallet. We have under-invested for so long in the kind of 24/7 generation assets needed to serve these data centers that electricity prices can't help but rise...likely precipitously... going forward. It could get ugly.