The inexorable rise of AI is bringing more information, more rapidly to our fingertips but creating an increasingly complex debate about its governance, geopolitical control, impact on the labour market and how to best manage power-hungry data centres.
New York this month announced a pause on environmental permits for hyperscale data centres, “in order to build a nation-leading regulatory framework that protects ratepayers, the environment, the energy grid and communities across the state”.
“As data centre development threatens to hike up utility bills, deplete our natural resources, and create uncertainty for New Yorkers, it’s my responsibility to take action and lead,” Governor Kathy Hochul said.
The pause comes as across the pond, the European Union grapples with how to regulate climate requirements for data centres, at the same time the continent is experiencing summer heatwaves and bushfires.
Then there’s the matter of “sovereign AI” and who gets to govern the infrastructure, data and operations.
Last week, Microsoft announced a strategic, multibillion-dollar deal which will include building more data centres in Europe with French AI company Mistral, which pitches its models as an alternative to US-controlled technology.
The data centre industry has evolved rapidly, with unprecedented power demand.
Hyperscale facilities now routinely demand hundreds of megawatts and strain electrical grids that were never designed for this scale or pace of growth, according to a recent Special Issue report by Benchmark Mineral Intelligence.
For comparison, it said traditional enterprise data centres were designed around power densities of 5–10kW per rack. A facility considered large by the standards of five years ago might have drawn 50-100MW in total, enough to serve a modest city district and regarded at the time as a significant infrastructure undertaking.
Today, GPU-optimised AI training facilities are regularly deploying racks at 50-100kW, with next-generation liquid-cooled configurations pushing beyond 200kW per rack in the most advanced deployments, Benchmark said.
It estimates that 58GW of new data centre capacity will be added in the US alone between 2026 and 2030, a figure that comfortably exceeds the total installed data centre capacity of any other single nation today.
Battery energy stationary storage (BESS) has emerged as a viable and increasingly strategic response to the power challenge, Benchmark said.
But it warned BESS couldn’t be optimised to simultaneously address data centres’ varying power needs.
“Whilst BESS can address each of these use cases in isolation, the requirements across them are sufficiently different that a single system optimised for one function will inevitably be compromised in another,” the report found. “Short-term backup and load management demand very high power and near-instantaneous response but require very little energy capacity, whilst long-term backup and peak shaving demand the opposite.”
Australian Prime Minister Anthony Albanese said this month that large-scale data centres in Australia would need to underwrite new power supply and be “net-generators, not net-users”.
He’ll seek agreement on an approach to new AI national standards from premiers and chief ministers at a National Cabinet meeting next month.
Finally, at a commodity level, the growth of the data centre industry adds weight to the energy transition demand thematic.
Globally, data centres are forecast to account for more than 5% of copper demand related to electrical infrastructure by 2030 and around 2% of lithium demand, according to the Benchmark report. It forecast copper demand from data centre installations would reach about 500,000t this year and more than double by 2040.
