AI race fuels record data centre boom across Asia-Pacific as Australia takes lead
Data centre construction has accelerated dramatically and will continue to surge as developers race to beat the formalisation of government policies around artificial intelligence.
Half-yearly data shows development across the Asia-Pacific reached a record 26.5 gigawatts, with the region adding 7.1 gigawatts in just six months. Cushman and Wakefield data shows Australia is at the forefront of development in APAC, which is fast becoming the global powerhouse of data centre investment.
APAC’s total data centre capacity is projected to increase by 2.7 times by 2030, outpacing the Americas, Europe, the Middle East and Africa.
A $300 billion investment opportunity across Asia-Pacific
Almost 77 per cent of APAC’s projected capital expenditure until 2030 is expected to be spent across Japan, Malaysia, Australia, India and Indonesia, representing approximately $US215 billion ($299.85 billion) in investment opportunities.
“I think the accelerated growth is what is surprising the industry and there’s no indicators that are telling us that that’s going to slow down,” says Andrew Green, Cushman and Wakefield’s head of data centre group, Asia Pacific.
“It’s no longer gone from being a specialist facility that nobody really needed or understood. Now, everything you do in your daily life is going through a data centre.”
Population per megawatt is a key measure of data centre market potential, and Australia has 16,938 people per megawatt, Cushman and Wakefield research shows.
Countries with high population per megawatt, such as Vietnam and the Philippines, reflect an undersupply and runway for capital expenditure expansion, while those with a low population per megawatt, such as Australia and Singapore, point to more digital infrastructure and a higher level of cloud adoption.
How new AI regulations could reshape development
The rapid evolution of data centres and the projected development pipeline prompted government action, with Prime Minister Anthony Albanese announcing a new Office of AI last month. The office will co-ordinate a new national framework of mandatory AI standards to be announced early next year.
Data Centres Australia estimates ongoing development will deliver $5.6 billion of economic activity per annum through 2030, and Australian states and territories are keen to claim their share of the spoils. Industry figures show many data centre operators and developers will rush through applications before new rules take effect.
“I think that’s inevitable because the industry can’t really wait for the government to issue those guidelines,” Green says.
“But equally, there is a global benchmark within the data centre industry around design standards, quality and security and I’d be surprised if what eventually comes out of the Aussie government isn’t somewhere very close to that global benchmark.”
Power supply emerges as the industry’s biggest challenge
However, power supply continues to be the pin pricking the balloon of the data centre boom.
The Australian Energy Market Operator has warned data centre power use is expected to rise seven-fold over the next decade.
To this end, the prime minister met with state and territory leaders in August to reach agreements on legislating renewable energy usage for data centres. The government’s aim was for all new data centres to be powered by 100 per cent renewable electricity.
Data centre operators already voluntarily offset 70 per cent of their energy use through power purchase agreements and large-scale generation certificates.
The Northern Territory and Queensland remain resistant to renewables, preferring to rely on their gas and coal power plants, but after last week’s meeting Albanese announced he had achieved “buy-in on Australia’s national AI laws”.
“I’m very confident that we’ll move forward with every single jurisdiction, making a difference,” he said.
Can Australia become a global leader in green data centres?
Green expects power limits will push data centre development further from metro areas.
“A lot of the traditional places that we develop data centres are becoming power grid constrained, mainly because we are building at a speed much quicker than the utilities can upgrade their infrastructure in line with,” he said.
“So, I think that it may not grow as aggressively in the second half of the year, but you’re still going to see growth, but it may be in less traditional locations than we’ve been used to over the last decade.”
If it harnessed renewables, Australia could be the world’s leader in green data centre development, a report commissioned by Data Centres Australia found. The report, by Mandala Partners, found data centres powered by renewable energy would position Australia to effectively export clean energy embedded in compute tokens, which are data units processed by artificial intelligence models.
“Investing in new digital infrastructure gives Australia the opportunity to lead in the most profound technological shift we have ever seen and boost our role as a global clean energy powerhouse,” Belinda Dennett, chief executive, Data Centres Australia said.
“The economic growth opportunities are exciting but this is about more than that. It’s also about securing our sovereign capability and strengthening our influence over the global standards that will govern AI for decades to come.”
