Data centers turn to secondary and rural markets to meet skyrocketing demand and soaring energy requirements
Denver, May 01, 2024 (GLOBE NEWSWIRE) — The proliferation of generative artificial intelligence applications is fueling unprecedented growth in the data center market. Rapid development, deployment and adoption of generative AI programs has left data center operators scrambling to stand up new facilities and build out the additional capacity needed to meet demand. Growth in the market should create new business opportunities for rural broadband operators and electric cooperatives as data centers expand beyond their typical urban confines.
Data center hubs have historically been deployed in urban areas given their access to power, water and integrated fiber networks. Proximity to Fortune 500 companies and government agencies that rely heavily on data computing and storage has also played a role in data centers favoring urban markets. However, that model is evolving quickly as data center operators are forced to evaluate new markets to secure the energy resources needed to run power-guzzling generative AI applications.
According to a new report from CoBank’s Knowledge Exchange, generative AI is set to be a game-changer for the hyperscale data center landscape, enabling new deployment strategies and ultimately benefiting rural America in the process. Data center power consumption is currently wreaking havoc on the energy complex and contributing to a growing imbalance between supply and demand – which is forcing data center operators into secondary and rural markets.
“Data center operators have recognized that it’s easier to move gigabits of data than electrons and have entered locations where land is available and additional power is more attainable,” said Jeff Johnston, lead digital infrastructure economist with CoBank. “Over time, we expect new data centers will move outside of secondary markets and deeper into rural America.”
Developing trends in the data center market, including the need for more power, data computation and storage capacity and internet connectivity, should represent growth opportunities for some rural broadband operators and electric companies, Johnston added.
The recent swell of attention surrounding generative AI appears to be justified as the technology is widely expected to have staying power. Amazon, Microsoft, Google and Meta are investing billions of dollars into generative AI, which will be deployed horizontally across devices and transcend industries delivering operational efficiencies as well as new products and services.
A breakthrough graphical processing unit chipset technology from semiconductor provider Nvidia is largely responsible for the rapid growth of generative AI. The platform enables large language models to run deep learning algorithms that can recognize, summarize, translate, predict and generate content using enormously large data sets. Generative AI applications leveraging GPU chipsets require significantly more computing resources than legacy AI applications running central processing unit chips.
For instance, the International Energy Agency has indicated a request to ChatGPT requires 2.9 watt-hours of electricity. That’s nearly 10 times as much as the average Google search. Those intensive power requirements, combined with the growth in AI data centers, are driving the supply and demand imbalance in energy markets.
Data center fueled demand for electricity is growing so fast it is forcing some states and power providers to dramatically revise their demand forecasts in real time. And the CEO of chip-design company Arm suggested that without greater efficiency, AI data centers could represent as much as 20% to 25% of U.S. power requirements by 2030, up from ~4% today.
“The demand for new data centers, energy and broadband show no signs of slowing down, and rural America will have the opportunity to help serve this need,” said Johnston. “Some of these opportunities will carry risk for rural infrastructure providers and require capital expenditures. So careful analysis is imperative for those looking to enter the market. It’s not for everyone, but the growth opportunity cannot be denied.”
Watch a video synopsis and read the report, The Rural Revolution is Coming as Generative AI Drives Hyperscale Data Centers.
About CoBank
CoBank is a cooperative bank serving vital industries across rural America. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states. The bank also provides wholesale loans and other financial services to affiliated Farm Credit associations serving more than 77,000 farmers, ranchers and other rural borrowers in 23 states around the country.
CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture, rural infrastructure and rural communities. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and also maintains an international representative office in Singapore.
*Jeff Johnston is available for interviews with the media upon request.
CONTACT: Corporate Communications CoBank news@cobank.com Julie Davis CoBank 202-215-1354 Dave Harding Knowledge Exchange Media Relations 262-825-7926 david.h.harding@outlook.com
