Microsoft will partner with several investment companies to raise around $100 billion of capital for data center projects under a new ‘Global AI Infrastructure Investment Partnership’ (GAIIP).
Supported by investment firms BlackRock, Global Infrastructure Partners (GIP), and MGX, Microsoft will work towards building and expanding on data center projects, including the energy infrastructure required to power them.
Nvidia will also offer its expertise in AI infrastructure to GAIIP, while the fund stated that it will “actively engage with industry leaders” to ensure supply chains and energy sources.
“Mobilizing private capital to build AI infrastructure like data centers and power will unlock a multi-trillion-dollar long-term investment opportunity,” Larry Fink, Chairman and CEO of BlackRock, said.
“Data centers are the bedrock of the digital economy, and these investments will help power economic growth, create jobs, and drive AI technology innovation,” he added.
Microsoft CEO Satya Nadella was similarly enthusiastic, stating that GAIIP will drive innovation and growth across “every sector of the economy” through collaboration.
Power supply concerns
Despite ramped-up investments, data centers consume a massive amount of energy and there’s still little in the way of a large-scale solution.
On the one hand, there’s a shortage of power - a report from JLL earlier this year predicted a “scarcity” of data center colocation supply largely caused by regional power limitations. A large amount of this uptick in demand can be attributed to power-hungry generative AI compute systems.
On the other hand, there’s a concern that the massive increase in power use will greatly damage the climate as more fossil fuels are burnt to sate the massive power consumption of data centers.
In May, Microsoft’s big push towards AI-focused data center locations caused a 29% surge in its carbon emissions. This seriously damaged the firm’s target of meeting carbon negative goals by 2030.
BlackRock’s announcement is notably light on any mention of how this might be dealt with, though it does state that “decarbonization investment capabilities” form an element of GAIIP.
GAIIP has options to tackle issues
There are several major challenges facing this fund according to Daniel Efrati, CEO of data center company NED, including supply chain issues, labor shortages, and regulatory hurdles.
“The effectiveness of this fund and partnership will largely depend on its ability to navigate these obstacles while addressing critical power consumption and climate concerns,” Efrati told ITPro.
Efrati that the partnership should consider forming joint ventures with local data center developers and operators in order to leverage regional expertise and existing relationships. This could accelerate the ability to scale and maneuver regulatory compliance, he added.
“While the partnership aims to prioritize energy efficiency and decarbonization in its infrastructure projects, balancing the massive energy demands of AI infrastructure with environmental goals will be a formidable task,” Efrati said.
