Given the growth of the AI economy, building data centres could be key to attracting FDI, according to a report by Khazna.
There is a growing sentiment that there was an overestimation of what AI could deliver in the short-term. Building more infrastructure first, could be an essential factor to accelerate growth.
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Foundational to the industry
The report highlights that revenues from the generative AI industry could reach $1.3tn by 2032. However, to fuel the growth of the industry, data centres are vital.
These are often located in city outskirts, business parks, and different regions altogether. Having the infrastructure to accommodate the AI industry could put countries in a better position to benefit from the sector in the future.
Researchers found that during the construction of a typical data centre in the US, there was a capital expenditure of $215.5m, $243.5m in output generated and 1,688 local workers employed.
However, Europe seems to be a major player in this nascent sector. Of the $44.8bln of FDI spent on data centres in 2022, $20bln of it went to Europe. Germany and the UK have over 500 centres each.
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By GlobalDataIn Labour’s manifesto, they addressed the issue directly: “We will ensure our industrial strategy supports the development of the artificial intelligence (AI) sector, removes planning barriers to new data centers.”
Environmental concerns loom large
The enthusiasm for data centres is countered by worries over their environmental implications.
The centres require huge amounts of energy and resources. Research suggests that about 700,000 litres of water were used to cool the machines that trained ChatGPT-3 at Microsoft’s data facilities.
In Uruguay and Chile, places where drought has squeezed the local water supply, locals have shown skepticism and reluctance towards developments within their borders.
Earlier this year, a Chilean court partially reversed Google’s permit to build a data centre in Cerrillos. It asked Google to account for the effects of climate change in its application.
While data centres will be necessary for the AI sector to bloom, they require a more holistic approach in order to protect sustainability objectives and local communities.
