What’s Causing the Skyrocketing Demand for Compute?

As digital transformation ramps up, an unprecedented demand for computational power is straining data infrastructure around the globe. This surge is fuelled by a range of digital services, which now underpin everything from enterprise operations to the rapid advances in generative AI. With data centers (DCs) at the heart of this growth, questions around energy usage, architecture, and sustainable scalability have come sharply into focus.

Data Centers: The Backbone of the Digital Economy 

Data centers have evolved from repositories of information to become the operational bedrock of modern businesses. They now form the backbone of our digital economy, supporting everything from streaming services to complex AI operations. This transformation has ushered in one of the most lucrative business models in the history of humankind: converting energy into compute power. 

Historically, data centers primarily served to handle the transfer of information, notably for streaming services. They were largely storage-oriented, with the exception of certain compute-intensive operations like cryptocurrency mining. However, in modern times, the role of DCs is expanding. Hyperscalers and tech giants like Google, Amazon, Meta, and OpenAI, having already disrupted digital landscapes, are attracting ever more users to a growing range of digital services, resulting in skyrocketing demand for computing power. 

AI systems, such as ChatGPT and DALL-E, require immense computational resources both for model training and – more crucially – at the time of inference (when a user inputs a query, and the AI service ‘thinks’ before returning an answer). 

This shift to AI has dramatically increased the pressure on data centers and DC operators. AI applications process vast amounts of data and perform complex calculations in real-time, far beyond what traditional device-installed software does. They tend to use significantly more compute power, which in turn requires more cooling and consumes more electricity compared to traditional data center use cases.

As AI continues to evolve and find new applications, it’s creating a paradigm shift in how we use computers. Even for those who may not directly interact with AI models, these tools are becoming embedded within day-to-day software, such as email systems and productivity applications, pushing the demand for robust compute capacity ever higher.

The ongoing wave of global digitization, particularly accelerating in developing regions, is a primary driver of surging compute demand. More users worldwide are adopting an ever-expanding array of digital services, from entertainment to essential business operations. 

The proliferation of IoT devices, from smart home gadgets to industrial sensors, is generating vast amounts of data that require processing and storage. 

Companies are increasingly moving their sales, workflow management, customer relationship management (CRM), and communication systems into the cloud, further fueling the need for data center capacity.

Edge computing — bringing data processing closer to the point of use to bring down latencies and improve user experience — is another key driver behind the DC industry’s massive growth. These facilities support high-speed services like autonomous driving, real-time analytics, as well as audio and video streaming. 

Hyperscalers are attempting to expand swiftly to meet these diverse needs, resulting in a more decentralized network of data centers.

Different regions are experiencing varied growth rates in compute demand, influenced by factors such as power availability, fiber connectivity, economic development, and regulatory environments. While data centers have historically clustered in key markets like Virginia, USA, the landscape is changing. 

With today’s data center demand crunch, availability of consistent, round-the-clock energy sources has become a crucial consideration for DC operators when deciding where to site new facilities.

Meeting Soaring Compute Demands with Resilient Energy Solutions 

As the demand for data centers grows, so too does the need for resilient power solutions that support sustainability goals. Many leading markets are now emphasizing low-carbon energy sources to mitigate environmental impacts and secure a reliable energy supply amidst rising grid pressures.

Regions with robust power infrastructure and shorter grid connection timelines are seeing accelerated growth in data center deployments, while areas with limited power availability or lengthy connection processes face challenges in attracting new facilities despite rising compute demand. As such, many firms are now exploring avenues for co-located behind-the-meter power generation for DCs.

Humanity’s collective appetite for computing power continues to soar, driven by factors like ongoing digitization (both at the enterprise and personal, or household levels); the rise of AI; and surging demand for edge computing. 

As we look to the future, one thing is clear: the symbiosis between advanced energy solutions and data center technology will be crucial in supporting the continued growth of our digital world.