AI data center expansion faces opposition, Microsoft (MSFT.US), Google (GOOGL.US) and other tech giants respond to power and water concerns

The Zhitong Finance App learned that as the boom in artificial intelligence drives the rapid expansion of data center construction, its huge demand for electricity and water resources is causing more and more communities and regulators to worry. Tech giants such as Microsoft (MSFT.US), Google (GOOGG.US), and Amazon (AMZN.US) intensively responded to related questions during the climate conference held in New York this week in an attempt to ease concerns about rising electricity costs, water consumption, and grid pressure.

Microsoft's chief sustainability officer Melanie Nakagawa said on Wednesday that the questions raised by the community are “very important”. One of the core questions is what local residents should expect in terms of electricity costs after large-scale data centers are implemented.

Nakagawa pointed out that Microsoft is taking a number of measures, including “isolating” the costs associated with data center construction from ordinary consumers' electricity bills, preventing residents from bearing additional infrastructure costs, increasing support for the local labor force, and improving the water efficiency of data centers.

In terms of water resources, Microsoft is trying to improve data transparency. Nakagawa said the company disclosed the water usage situation at its data center park in a sustainability report earlier this year.

As investment in AI infrastructure surges, water scarcity has become one of the major disputes facing data center construction. Data centers require large amounts of computing equipment, and equipment cooling may consume large amounts of water resources, which is particularly likely to cause opposition from local residents in regions that face pressure on water supply themselves.

Amazon's Chief Sustainability Officer Kara Hurst said that the company's data center does not use water for cooling about 90% of the time. She believes this data is important because there is currently a lot of misinformation surrounding data center water issues. Hurst also called on the market to repay attention to grid stability, and said the US needs to adopt appropriate policies to stimulate investment in power infrastructure, including further developing clean energy such as wind energy, solar energy, and nuclear energy.

$68 billion project blocked, data centers face political pressure

The resistance faced by data centers is already affecting actual investment projects. Research agency Data Center Watch reports that in the second quarter of this year alone, about 45 data center development projects in the US were blocked or postponed due to local community opposition, involving a total investment of about 68 billion US dollars.

Meanwhile, legislatures in about 30 US states have proposed measures relating to issues such as data center site selection, electricity supply, and water use, and many of them have already been passed.

Microsoft, Google, Amazon, and Meta are currently among the largest developers and users of data center capacity in the world. As the demand for computational power from generative AI rapidly increases, these companies have invested huge sums of money in recent years to build servers, electricity, and related infrastructure.

Amanda Peterson Corio, head of global data center energy at Google's parent company Alphabet, said that one of the major obstacles facing the data center industry is that it has also been criticized by both the left and right ends of the US political spectrum, and as the election approaches, this issue may receive more political attention and capital investment.

Corio believes technology companies and other related industries need to work together to change the political narrative around data centers and address infrastructure bottlenecks because the economic benefits of related investments are huge.

Governor of Illinois: Not in favor of simply stopping, but conditions should be set

Local governments in the US are also becoming more cautious about data center expansion. Illinois Governor JB Pritzker said on Tuesday that public concerns about data centers are reasonable. The problems include not only huge demand for electricity, but also various aspects such as water consumption, noise, and land planning.

However, Pritzker does not support simply suspending data center construction. He said that simply announcing the suspension of new projects would not really solve the problem. In contrast, states should set clear conditions for new data centers, including requiring developers to supply their own clean energy and adopt closed-loop water circulation systems.

The benefits of AI have yet to be fully demonstrated, and the industry is seeking to change public perception

Brook Porter, partner at G2 Venture Partners, believes that some of the current boycotts against data centers are “irrational”. G2 initially invested in Crusoe, which is participating in the construction of a large-scale OpenAI “Stargate” project in Abilene, Texas. Porter believes that the public's current aversion to AI infrastructure stems in part from the fact that most people have yet to experience the actual benefits brought by AI firsthand.

“I think the real answer is that most people haven't experienced the benefits of AI.” Porter display. What many people now feel is more of a “noisy and worrying threat,” such as fear that AI will take their jobs.

He believes that in order to reduce resistance from local communities, future data center developers may need to choose more locations away from sensitive areas of power grids and densely populated areas, and at the same time reshape the social image of data centers, emphasizing their role in creating employment and promoting industrial development.

World Bank: It is difficult for emerging markets to replicate the boom in data center construction

However, the current boom in data center investments sweeping developed economies such as the US may be difficult to replicate in emerging markets.

World Bank Group President Ajay Banga said that emerging markets do not currently have a large number of data centers, and it is difficult to expand on a similar scale in the future. Banga pointed out that AI data centers require not only huge computing power, but also an extremely adequate power supply. In some cases, demand for electricity even exceeds what some advanced economies can easily provide, making the challenge even more obvious for developing countries with already relatively poor infrastructure.

This means that in an economy where electricity supply is still scarce, allocating large amounts of limited energy resources to AI data centers may lack a realistic basis.

Surge in AI electricity use spawns grid investment opportunities Wall Street banks compete for financing business

At the same time, the huge demand for electricity brought about by data center construction is also spawning another huge wave of infrastructure investment, namely the upgrading of the US power grid. As AI data centers drive unprecedented increases in electricity demand, America's aging transmission and distribution networks are under increasing pressure. Major global banks are using this week's New York climate conference to find relevant funding opportunities.

Heather Zichal, head of global sustainability at J.P. Morgan Chase, said the bank plans to hold talks with more than 100 customers during the conference. Among them, the financing of US grid modernization projects will be one of the key points of discussion. “We are entering a new era where access to electricity is increasingly determining where companies invest, expand and compete,” Zichal said.