Not Your Father’s Data Center - Live From PTC ’26 | Data Center Trends with datacenterHawk

Starting point is 00:00:06 All right, it's January and we're in Hawaii, so it's got to be PTC. So welcome to another edition of Not Your Father's Data Center. I'm your host, Raymond Hawkins, and we are joined just like we were last year by the legend David Liggett. But instead of just David, he decided to bring the cavalry this year. That's right. David, it's awesome to have you. Will you tell us who joined with it? That's right.

Starting point is 00:00:27 Absolutely. Raymond, thank you for the opportunity to be here. We have a global team here at Data Center Hawks. So David Saunders is our regional director in Amia. Ed Sosha handles our North America business. Steve Sasseh heads our Latin America operation. And then sitting down here on the end is Dedi Iskandar, who's out of Singapore, who runs our APAC business.

Starting point is 00:00:49 So this is the global team, our leaders. Now they have team members under them that are market experts in the market, touring data centers, talking to people in the space and make sure that we can deliver the real-time data that our customers need to make decisions. Awesome. So I know probably everybody knows who you are, and I know you're self-deprecating enough to diggle when I say how awesome you are. Well, you take two minutes and tell your story. Tell your story. Tell a little bit of the Data Center Hawk story before we get into talking about what is shocking in every news broadcast today of the data center business. Tell us a little bit about what you guys do

Starting point is 00:01:22 to orient folks, then we'll get into what the team does. Absolutely. And it does still shock me. You're right that data centers come up on, you know, CNBC lines. Every news story. All the side. Someone was talking about it. Yeah, David Liggett, CEO and founder of Data Center Hough, started the business back in 2014. Previous to that, I was with CVRE for eight years, and so I've been in the Data Center business and industry net for 20 years, which still amazes me. And I actually kind of have the gray hair, starting to have the gray hair to prove it. Sorry, guys.

Starting point is 00:01:53 Edge response for most of the gray hair, right? Yeah, 100%. Yeah, 100%. We are a subscription-based platform, data in it. analytics for data center operators, consultants, end users, vendors, and investors in the space. And so we track supply, demand, pricing, and trends for over 115 global data center markets on a quarterly basis. And so I started the business for people like me. I was out trying to help companies make decisions in this space. The data wasn't there. It wasn't organized in the manner

Starting point is 00:02:24 that we needed to. And this was, you know, like I said, 12 years ago, and the capital commitments we're already high. Now you look at our industry out of this world capital that is needed to fuel what is taking place from a demand perspective. And so, you know, our data is in the hands of the people, the users, the data center operators that are moving the space today. And so our team is out there all the time gathering that data, analyzing it, getting it on our platform so people can make really good decisions. Zillow of the data center market. Is somebody ever ever called you that? Right. I think that's a fair, yes, sir. Analogy. You know how I can always remember what year you guys started 24. I was a senior in high school and they got started the

Starting point is 00:03:00 business. So that's how I always remember 2014. So walk us through, let's talk, every day, right? Every day, every, you mentioned CNBC. Yeah. I do get at a kick. Every news broadcast I watch. So there's something about our industry. Yep. You know, whether it's tangential by talking about AI, whether it's talking about the people who are driving the buildings that we're all constructing or whether it's just talking about the challenges that come from data center business. So I'd love, you know, if you guys are willing to go through regionally and each take one. Like, you know, people are always talking about power, people are always talking about water usage, people are always talking about AI. Are we in a bubble?

Starting point is 00:03:40 People talking about capital. So let's just take one and everybody go through if you're willing. Diddy, if you'd start talking a little bit about power in APEC. You know, I think we have a very, at least Compass does. We have a very North American view of power. Yeah. But I'd love to hear how you guys are handling power in AAC and. what that's doing to the industry from your limbs out there in Asia Pee-K.

Starting point is 00:04:01 Sure. So the power situations in Asia Pacifics are distributed quite unequally between the countries in Asia's. Some of the tier one markets such as Japan, Singapore, and Australia, they were facing similar situations to what you have here in the US, where the power deliveries, timeframes, actually get extended to, from the most, I would say, severe which is eight to ten years apart. And then to the, I would say, the fastest is about one or two years, I think. And we are also facing a problem with regards to the grid quality in this case, where the power has to be delivered in the, I would say, more stable manners, whereby the grid quality in Asia Pacifics are not equal in terms of quality as well.

Starting point is 00:04:54 So that's the reason why in some of the year too much. markets, quite number of facility has to be supported by non-traditional power in these case. So give me an example. I mean, you mentioned Singapore, Japan and Australia, all those are tier ones. What are some of the tier twos where that grid work is happening? The grid work is happening in the Vietnam market, Philippines, because of the quite number of earthquakes in Philippines.

Starting point is 00:05:19 The grid work has to be done in Kalyne as well, and as well as in India. That was going to be one of my I was going to ask to India. What's the infrastructure, power infrastructure like in India? Tell me, let me ask it this. What's a big project in India from a power perspective? The biggest project in India right now, I would say that is the latest last month by Google for the India 5 gigawatts data centers. And that itself required a huge upgrade, upgrades for the Chennai region itself.

Starting point is 00:05:51 And that's, I think, I'll say, one of the biggest in there. Yeah, 5 gigs. That's real stuff. Yeah, that's real. Actually, that's one that you bring up, I'm glad you asked that question right, because each region is viewing AI from a different lens. You know, I think it's easy as our business, you know, in the U.S. to think, oh, you know, all these projects are this size and these trends are happening.

Starting point is 00:06:09 And it's, it's a little different in, you know, each head of region as a whole and then country to country internationally. It's different. Yeah, that's why I'd love to get a feel. Steve, if you want to give us a lat-end view, I'd love to hear, you know, where's it good, where's it bad, where the challenges, what's the timeline look like and what's big? What's a big project there? I mean, Brazil, obviously, the biggest market in Latin America with about 40, 45% of the market, they've done a lot to incentivize data center growth there.

Starting point is 00:06:36 So on the power side, Brazil set up very well, Sao Paulo area, Rio area right now is grown very quickly, but it's spreading to tier two markets. Chinese cloud just took 200 megawatts up in Fortaleza, northeastern part of the US, Rio. There's a lot of hyperscale capacity going on in Rio. and Rio. It's mostly because of the submarine cable capacity and the interconnection, so they're going to the coastal areas. So I think Brazil is a sort of a positive story of the region. Then on the flip side, you have Mexico, which is, you know, you have a public utility there

Starting point is 00:07:08 that builds the infrastructure or all the transmission lines and they're not growing as quickly as they should. So there's a power constraint going on in Crettoe right now where there's a lot of growth, data center growth. So the power constraints right now in Mexico are a real story. There's a lot of companies, some very large data center companies that have no power in their data search. And they can't sell any more racks or any more space because they may not get power for one or two more years. And if you don't mind, and you can go through country if you want, but when you say constraint,

Starting point is 00:07:39 are we constrained a generation or we constrained it transmission or are we constrained to distribution? Transmission is the biggest one. It's transmission. Got it. So, and then there's other issues going on there where there's, you build a data center in an industrial part, But then the industrial park charges, they build out the infrastructure to the substation, and then they charge quite a hefty fee to interconnect that. So I'm a data center provider.

Starting point is 00:08:04 I want to build a data center in a park. I have to pay the park $800 to $1,000 or KVA for whatever power commitment I'm committing to. You know, if you're talking 100 megawatts, that's a lot of money. So it's not all through the utility. No. Oh, okay. So there's private companies doing the substation to the park. And then the utility does everything else, right?

Starting point is 00:08:24 Gotcha. Now, I'm not sure if kidnapping the president will help, but we could do that if that helps in the data center business. Just let you know, we kind of do that in some countries, but we'll try to, if it'll help, just let me know. I'll make a couple calls. Finally, in Argentina as a country, politically has been un- not politically,

Starting point is 00:08:41 economically has not been very stable, but right now they found the second largest natural gas reserve down there in southern Argentina. So potentially the same thing happened in West Texas could happen in Argentina. And once they build the infrastructure, the president there is very close to the U.S. president, and he wants to bring investments down there. So I think Argentina, you could see some investments going in there.

Starting point is 00:09:03 And you're talking, you know, five, six cents a kilowatt hour in most of these markets as well. So Argentina, Eurowide, Brazil, five to six cents a kilowatt hour. So that sounds competitive to the U.S. Is that commute competitively down there? Right. Right. Right. But remember, theirs is, if I would say 90 to 95 percent renewable.

Starting point is 00:09:20 So in Argentina, Brazil and Eurowide, you can have 90. to 100% renewable energy, which can't really get that right now in the U.S. Different, different. All right, Ed. Give us your view, power. What's a big project? Yeah. So you get the easy one.

Starting point is 00:09:35 Yeah, very easy. No, I think, you know, everybody, to your point, Raymond, everyone's always talking about power in the U.S. When you ask the question, is it a generation issue or a transmission distribution issue? It really depends regionally, right? So in the last 18 to 24 months, we've seen Texas explode. with projects. West Texas, particularly, Abilene, Amarillo, you know, out in Lubbock, South Dallas continues to see quite a bit of activity, you know, and that largely is due to the acceptance or adoption of that gas, which for a long time folks didn't want to touch. And then they realize,

Starting point is 00:10:08 hey, we can't possibly get to 10, 20, 50 gigawatts with purely what's on the grid with regards to renewable. So I think that's a big sort of shift away from Northern Virginia and away from some of the tier one markets down at Dallas, which is a tier one market, but then of course west. But we're starting to see these projects go to tertiary, non-traditional data center markets, and that is because of the availability of power there. You know, we saw-

Starting point is 00:10:35 Name two markets, give me two that you think, secondary might even be third tier. Yeah, so I mean, if we think about, and it's difficult to call them markets, but regions where we're seeing very large development take place, so Paul Washington was one of them. And then we saw, very large gigawatt plus deal in Santa Teresa, New Mexico,

Starting point is 00:10:52 which is just outside of El Paso, 11, 11-1-7. So if we think about that, it's going out, but a lot of that is sort of predicated on the notion that these workloads, these requirements, will be for large language modeling clusters and training clusters so that they don't have that latency sensitivity. I think the reality of the situation is a lot of these hypers, a lot of the AI companies,

Starting point is 00:11:15 are actually doing training and some, some cloud hosting as they sort of shift to that inference. So we're seeing these gigawatt developments still taking place, but we're also starting to see folks come back to the market with 20 to 50 megawatt deployments. And I think that's, you know, for part of that hub and spoke model to kind of get ahead of that, you know, one fungibility is a key word.

Starting point is 00:11:38 So what do we do in the next five, 10, 15 years with these data centers? Are they proximate to a major metro? Are they, you know, is the latency low enough that they can actually support these workloads? and support the things that they're tried to do there. Yeah, and I think too, just on Ed's point about the demand, it's important, I think, for our industry to remember,

Starting point is 00:11:57 there is an industry that exists or demand sector outside of AI. We've been so focused on it over the last several years that, you know, the cloud market continues to mature 15 to 30% a year. You've got enterprise, the enterprise user command is stronger than ever, and then the retail demand continues to be strong. And so I think, you know, it's easy to forget what has been forget what has been kind of the bedrock of the data center space for when we started this thing 20 years ago or however long ago it was and and that space is still growing still maturing and now you

Starting point is 00:12:28 layer AI on top of that it'll be interesting to see how like a small a medium-sized financial firm chooses to engage with AI in a co-location facility or how retail customer has it so I think you know we are we are in a historical demand time period for our industry but underneath all of that is a really stable and growing part of the demand sector. So it's David, it's funny. You said that. I breakfasted a guy this morning and he talked about that he's got an enterprise customer talking about building their own 50 megallot data centers. He's like, hey, you know, they've looked around and I thought, you know, I've got stuff in six different places all over you. I can just consolidate it and build my own. It's a thing.

Starting point is 00:13:07 I know the, you know, 10 gigs here and 10 gigs there gets all the headline. But to your point, that's still going on. There's data centers of all sizes being built on the plane right out. talking a friend of mine, same thing. 80 megawatt data center in a remote market, but it was for a specific customer. That goes on all the time, even though the gigawatts are getting everybody's attention. All right, David, first of all, I do have to ask.

Starting point is 00:13:30 Guys, I missed the memo on the, I noticed three. So just somebody helped me out there. Let's do it now, but somebody helped me out. David, if you want to lead off with the bracelet, and then talk to us about what's going on in the Europe, Middle East and Africa. Sure, I was just given this in, when I checked into the hotel and said,

Starting point is 00:13:44 put it all this, so I did. All right, that's good enough. All right, I said, I didn't miss it. Very good. Yeah, I like the compliance. It's not a new follower. Good for the, not for me. I was too tired to ask questions. Good enough.

Starting point is 00:13:57 I just did what I was told. Yeah, so Europe, a similar story. It's all about availability of power and where can you get land and power in a suitable location. One of the interesting things we're seeing is a lot of data center operators partnering up with power companies and looking at how they can solve that. generation transmission distribution challenge. A lot of companies as well, in a similar vein, kind of looking to see work with power generation companies and say, look, have you got land on the site or closed by?

Starting point is 00:14:32 And this is across Europe and the Middle East as well, where we could actually take that land and develop a data center and offer services to the market that way. There's an awful lot of land capacity in Europe, in particular, in particular and the kind of length of time about to obtain the power and get the power delivered to site is still something that's that's to be determined if you like so we're watching really closely about the plan capacity in all the markets across Europe just to see what we can learn about when when's that

Starting point is 00:15:13 power actually going to be on that site and developed and available to the marketplace. It's further convoluted the situation by some companies will not start building at all until they have a customer. So that's going to make the Ready for Service State even longer. In the Europe and Middle East market, the permitting and the planning and the regulatory framework is extremely complex and that adds length of time to projects as well. And then on top of that, you've got a shortage of skilled labour of specialists of experts who can actually come and develop data centres and get them up and running and realized as live projects in a shorter time frame as possible so it's not just about power there are other things that factor into that

Starting point is 00:16:07 that the challenge that the market is facing in in the europe and middle east region it's hard for me not to steer us this direction for a minute who's your football club Rugby player. Rugby player. All right, that's good. That's good. I love that answer too. By the D.

Starting point is 00:16:23 My and Chelsea. Okay, good to know. But if you want to read it in the hour and I say, Arsenal. Yeah, very good, very good. So, a few years back, you know, when I, Flat D was everybody's talk in Europe. I don't hear that phrase very often anymore. I don't hear people talking about flap or flap D. So the last time I was in London, which would have been, you know, the summer, so six months,

Starting point is 00:16:46 months or so ago. There was talk in the US we call them opportunity zones. There was talk about the British government designating some very large tracks of land and commitments to do power and all that. Is that a thing? It was early in the conversations. Is that happening? And I know I'm only taking one of your three regions, but is that going on in the UK? In Britain in particular, I mean, first of all, you're right about the flap D. The emerging markets are kind of, they haven't caught up. They're not going to overtake, but they are gaining momentum so if you like the bread of the sandwich the north of the continent the Nordic region and the south of the continent the southern european countries like portugal and spain italy and

Starting point is 00:17:26 Greece they're gaining momentum and there's more and more deployment more and more capacity going into into those regions the flat d Frankfurt Amsterdam London Paris Dublin is still an important market but due to political moratorium being enforced there the growth that the rate of growth in Dublin is very, very slow now. The rest of the flat markets, they are still growing. They're still increasing in size and capacity, but there's definitely be a bit of a slowdown in that region. You're right, various governments around Europe

Starting point is 00:18:02 of taking the initiative in the UK, as you mentioned, the government dedicated data centres as critical national infrastructure. Now what that means is that planning decisions and the ability to do that, ability to permit for a data centre can be and push it through the regulatory framework can be taken out of the local authorities hands and pass to central government which in theory should speed the process and so the government in the UK has realised the importance

Starting point is 00:18:32 of data centres and the importance of the business of economy to the entire economy and importantly alongside sort of dedicating these these AI zones or around the UK, which is only a relatively small country, but they've said, right, it's not just about London, we've got to build these AI zones in lots of different locations around the country. They've also said, and realized, and this is really important, that they can't just allocate a piece of land with them an AI zone. They have to develop power onto that land and get power into that land in order to support, the kind of demand that we're seeing from AI data centers.

Starting point is 00:19:12 So I'm going to unfortunately make you talk a little bit more, David, before you give you a break. So talk a little bit about the Middle East. Just like I said, hey, used to be a lot of flat D. Starting to hear lots of conversation about development. When you think about the capital that's required to do the scale projects that are growing on around the world, there's plenty of capital in the Middle East. What do you see happen in there? Not only from where are they investing, but are they building infrastructure in the Middle East? Well, they're definitely investing.

Starting point is 00:19:40 They're definitely building infrastructure. The governments are very heavily involved in Middle East region. So if the government thinks it's a good idea and decides to put its weight behind an initiative, whatever that be, even outside the data centre industry, and you've seen it in sort of airports, port infrastructure and various other industries as well, then it usually happens and it usually happens on a really good scale and in a very impressive manner. manner. The market is still emerging in the Middle East, but the rate of growth has been quite exceptional in five years. So what's a big Middle East market? The two major markets

Starting point is 00:20:24 in the Middle East are Saudi Arabia and the UAE. Both of them are relatively small compared to global markets, but there are also some plans to develop multi-gigawatt campuses there. And if you look at where the Middle East is located, so you've got Saudi Arabia, you've got UAE, Amman, Bahrain, Qatar, Kuwait, etc. And Israel as well, and Turkey, they're very much looking at where they are geographically and say, hey, we as a region can become the AI hub that joins up Asia and Europe and the Western world, if you like. And we've seen that approach taken with their airport industries and their airline industries. So they're the, the, the, the, the, they've developed enormous airports and they want to become the major hub between

Starting point is 00:21:13 east and west if you like they're trying to take the same approach with data centers as well and they're putting supporting infrastructure in place in order to do that so more subsea cables are coming in through the region again linking up the Asia Pacific region to the European region to North America good stuff all right so two of you mentioned Nat gas and I'm gonna ask you to give me a not a politically correct answer on that gas, what really is going on in that gas. And I say not politically correct. So at Compass, you know, our customers, only thing you care about, you know, I got to be up all the time.

Starting point is 00:21:53 Speed matters, but right at the end of the day, once the building's delivered, it's got to be up. And so we get asked some really hard questions about Nat gas. So I'd love to hear what's the story in the region and are there real projects online? And is it real from a production perspective? Is it real simply as a backup system? What's really going on from a... I know the story. The story is, hey, it's much greener and it's much better. And I know why we want to talk about it,

Starting point is 00:22:17 but I don't know what's really happening in the net gas. So, you need to take a little bit of net gas in A-PAC for us. Yeah, I mean, to be very frank, the net gas stories are really not, I would say, popular in Asia-Pacifics. But there's one country which is my own country, Singapore, which is already using net gas since the 1990s because that's actually the only, I would say, is options to basically power up the grids, right? So Singapore has been using

Starting point is 00:22:47 net gas. So net gas powering turbines to run the grid in Singapore, right? Yeah. 100% from that countries. And that has, I would say, support the data centers infrastructures in the countries for the longest years, right? The distribution of other net gas systems in different part of Asia Pacifics, to be honest, it's not really equal, right? It's because usually it's along the, what we call it, the earthquake fault zone, because that is where the natural gas systems are naturally generated. Across the Philippines, Indonesia, Australia, they are using that. We have more of the other alternatives such as solar systems, which is because most of the Asia countries are in the equator, so solar is very popular, and as well as the biomass,

Starting point is 00:23:34 That's basically kind of a renewable energy options available in Asia Pacific. Gotcha. Steve, you mentioned being, I think you said, 90% green in Brazil, I think he said? Yeah, most of the countries are 80 to 90%. How are they getting there and how do they think about that gas? Yeah, so most of Latam has a lot, not Mexico, but South America has a lot of hydro, right? So I would say 50 to 60 to 70% of that numbers hydro. Okay.

Starting point is 00:24:02 So now they're trying to get more into solar, obviously, and other wind. But the NAC gas story is more, I would say more, in southern Argentina, like I mentioned. That's why Open AI announced the 500 megawatt possible deployment down there. We'll see if it happens, but that's the reason why they announced there. And then in Northern Mexico, and Northern Mexico is tapping into Western Texas NAC gas. So what you can do in, for example, Monterey Mexico, you can charge $5 a kilowatt hour versus in Cretro. you're at 13, 14, 50 cents, right? Because you're tapping into the Nat Gas instead of using the...

Starting point is 00:24:38 I gotcha. So it's more of a price thing than anything else. I mean, it's not, I think in the US a little bit different to transition, right, to renewables. Nat gas is sort of a next step before you get to more renewables. Down there, it's not a story of do we need a higher percentage of renewables, it's more of a cost. And a lot of it now is like in Euro-Y and others good story is a biomass, right?

Starting point is 00:25:01 So they're going to, they can do biomass down there. there and it's behind the meter, right? So you're not paying all these extra fees, extra taxes by connecting to the grid. And so you're able to save a lot of money by not connecting to the grid and doing this behind the meter. And not gas in the US. Yeah, yeah, I mean, it's here today.

Starting point is 00:25:18 I think if we think back across the, you know, over the last couple of years, when we started to see it adopted and get spoken about more, it was more of that bridging power solution. So the guys that are saying, hey, you're in a very constrained market, market. Let's drop a modular NAC gas deployment in there and we can get you going until the grid can bring you, you know, grid-type power utility counter. Now, this is this adoption of that gas,

Starting point is 00:25:45 as I was saying before, has really shaped where things are going. And, you know, I mean, I'll give you a direct example without name of the company, but I had a conversation with someone the other day that was saying, you know, our RFS date was nine to 12 months out for utility and we were very uncertain about it. And they asked the tenant if they were okay, switching the NACS, and they said, you just need to be stood up. And they did, and they were able to, you know,

Starting point is 00:26:09 bring that forward. So I think the ability to deliver that power in a timely way, stand up your requirement, is certainly like, you know, paramount for these guys versus a renewable portfolio standard or something like that. Now in the U.S., I would say NACAS is, again,

Starting point is 00:26:25 it's here today. Now we're getting to the NUC conversation where folks aren't just talking about SMRs, but we're seeing people, you know, we're seeing the hypersquilers acquire some of these reactors. Some folks are talking about building reactors, but that's a rabbit hole. I don't know if you want to go out right now. I don't know we got time to do that one, nuclear is coming. I think what it points to is just the transformation of our industry and how end users, data center operators, even investor groups,

Starting point is 00:26:49 are having to figure out how do we accommodate and set up a supply system that can meet the demand that's coming. Yeah. And we're going to have to do things differently, you know, and we're going to have to imagine. our industry differently in all regions if we want to hit the you know demand and and the things that I think we take the company. Yeah, yeah, I would think you know a final thought kind of on the power too is I think one of the largest challenges that players on our industry face are the planning cycles of these utilities and the way that you know the folks doing this strategy of the developers they're they're out of sync. So waiting for a utility to meet their planning cycles or have to time it the correct way doesn't always work with you being a developer having to satisfy the requirement of your end user and their workload.

Starting point is 00:27:38 So I think, you know, these areas, these regions where there's more of a data center presence, the utilities have gotten a lot smarter. But when we're going into these, again, tertiary, non-traditional data center markets, these utilities didn't have 20 megawatt, 50 megawatt, and then 100 megawatt data centers. they're getting like a three or four gigawod campus out of the blues like that. And I think that's, they've created a little bit of... Some challenges. Some challenges. You hear people talk about, right, things happen in Internet speed, right? And our customers all driving our industry or the Internet, right?

Starting point is 00:28:06 They are the Internet. If I think about businesses that operate sort of on the other end of Internet speed, it might be public utilities. And no criticism. They just, I mean, let's be fair. It's not a criticism. They just didn't have to, right? The guy who's building a neighborhood with 600 homes, he doesn't need three gigawatts. And he sure didn't need it next.

Starting point is 00:28:22 month. It takes a while to build 600 homes and even when he's done it's not you know it's not a gig it's you know a hundred megawatts or 20 megawatts and so it's just they just didn't they didn't have the pressure in their world that our world has had and they're they're adjusting they're just the fast but it's still a lot it's a whole system to your point that runs at a different pace than what the customer's driving. David tell us net gas in Europe and then we are going to talk about the customers driving sure yeah similar story there's a lot talk about natural gas in Europe as a source to develop power stations or energy energy centres that could support data centers. There's even a few examples of where gas engines or

Starting point is 00:29:04 gas turbines have been used as a temporary solution to get a project up and running before the utility connection can be delivered to site. And in those instances often the gas turbines then become part of the backup power solution for the that facility. Again, it's not a quick solution. It's, there's going to be all sorts of regulatory and permitting challenges and then like I said earlier, construction, specialist construction teams to develop that. So it's an option but wherever you look at the moment, there just doesn't seem to be a quick fix to the challenge of how, like you say, how do you obtain a power in the next three months? Yeah, it'll be interesting to see how it will be interesting to see

Starting point is 00:29:51 have it where it goes and one very pertinent example is the the Irish government has just announced and there's been a moratorium on new data centre developments in especially in and around Dublin due to constraints on the the national power grid in that country they have just announced that not just data center operators but any large user of energy can apply or will be able to apply to develop gas and power plants in order to support their business It could be something like an airport or a hospital as well that uses an awful low energy so it doesn't just have to be data centers.

Starting point is 00:30:29 The details are just coming out at the moment. So it would be really fascinating to see how that evolves and what happens to the data center sector in the next two, three years as a result of that step. So the time we got left, we're going to tackle two questions. I'm going to tell you ahead of time so you can noodle on them since we got a group talking. Two things. First, let's talk about nuclear, just like we did net gas. Ed, I appreciate you bringing up nuclear.

Starting point is 00:30:52 What is going on in your region? Are there real projects? What is the government's position? And what's the customer's position? So tackle those three questions regionally about nuclear. And then the last one I'm going to ask everyone of you to put a prediction out and tell me how long the AI boom that has got our industry that we're all fortunate to be a part of going straight up.

Starting point is 00:31:12 How long is these straight up going to last, right? I agree with David's point that there's a foundational level to our business. and there's enterprise demand and that's all going on. But right, the thing that's making the news is the AI hockey stick. Sure. So that'll be the second one, but think about how long you think the AI hockey stick is going to last. But D-D-D start with nuclear in an APAC. Is it real?

Starting point is 00:31:34 Is it up and running? Are there projects running off nuclear? And what's the government and customers' thoughts about nuclear in the AIPAC? I will say there's these certain perceptions towards nuclear, especially in some of the countries that are already using nuclear, such as Japan. They're already having a nuclear reactor for the longest times. I think many of the new projects were asking the governments to restart the nuclear as an alternative options for data center, but it's still a lot of rejections from them, I would say, the rural

Starting point is 00:32:06 inhabitants of using nuclear. But the SMR's, I would say, technologies has already been assessed in some of the Tier 2 countries, such as Indonesia, Philippines, even goes to Vietnam. as well as the Malaysia, as I will say, the fastest options to get energy in these two countries. As I mentioned, the Greek qualities in those countries are not great. So that's basically one of the,

Starting point is 00:32:31 I will say, the fastest option for fulable on nuclear. What's the government stance? I know we're talking about multiple countries there, but are the government, I mean, I know Japan's open to it, but are the governments in the APAC open to run in nuclear plants? They do.

Starting point is 00:32:43 I think small nuclear reactors, not really something that makes them concerns, right? And most of the projects are still very contained in the way. So, and Asia is large, it's so big. Different type of, I would say, auctions available right now. I think what the government does is when they realize that this is, data centers is one of the industry that fastest rising in the last two years.

Starting point is 00:33:09 And they were doing the red carpet deployments, right? What kind of technology are you bringing in? We are more than happy to support. what kind of, I will say, manpower that he generates from this industry, they are very happy to do it. So they are quite open to explore all these ideas. Awesome. Steve, nuclear and Ladam.

Starting point is 00:33:30 The region's always had so much hydro, right? Nuclear has never really been much of, I guess, not a priority. Not a push, not a priority. I mean, I do have to say that in Argentina does have a company that's developed a pretty good SMR that they're trying to sell globally now. So maybe they will start implementing.

Starting point is 00:33:47 engine them in Argentina. But at this moment, there's really no nuclear push. Interesting. And what's going on here in America with nuclear? Tell us. Sure, it's a, again, it's a bit of a rabbit hole. But no, I think we've seen it at a very large scale with the hybracalers trying to either do a sort of a joint venture

Starting point is 00:34:09 or an acquisition of the power that's coming from these large reactors. You know, I think a lot of folks want to know about the SMR story. I think that the US is closer to having those rolled out. The challenge is, Raymond, if you think about the guys that show up, or the folks that show up rather, to protest the data center is being built, if you think the woman that's mad because she's walking her schnauzer

Starting point is 00:34:29 and they put a big, ugly building up, that's like the worst thing that's gonna happen. Nor the tower behind it, right? Well, what I was gonna say is wait till she hears they're putting a small modular reactor inside and see how she flipped. She'll be fine. But I'm very pro-nuclear for sure.

Starting point is 00:34:45 I think a lot of these things today exist in pretty much test environments, but you're a military man, correct? These things have been floating around the oceans in submarines with little to no detriment of the service for decades. So I think, you know, aside from the nimbusum, then there's the regulatory hurdles, the NRC, the DOE, and all these guys. So there's a lot of red tape. But I am bullish on nuclear energy.

Starting point is 00:35:07 I think it's a very viable solution. And, you know, I mean, if folks have an issue with NAD gas, let's hear an alternative. solution and if it's not nuclear I'm all ears. Yeah what is it? Nuclear in Europe. Well Europe is a really pretty broad topic there. Each country has a different strategy, a different approach, different opinion on nuclear, whether it's good or bad or should be embraced, etc. But we are starting to seek some countries that have never engaged with nuclear at all, starting to talk about considering nuclear generation. Small modular

Starting point is 00:35:44 modular reactors. There's a lot of talk in Europe about those as well. Again, it's not a quick fix. It's still an emerging technology. It throws up all sorts of different regulatory challenges as well about where you're going to locate it. And also security impotations. So in the UK, where I'm from, every nuclear power station has its own police force because of the activity inside that complex and of course the materials that are inside that as well. So how do you get around all those extra aspects just to build a base set. It's a lot like David. He travels with his own security detail, right?

Starting point is 00:36:21 Yeah, yeah. You look at a nuclear submarine. You think, well, a nuclear submarine is fine, because you'd imagine that's pretty secure. There's a location for a nuclear reactor. But where you're going to plong these on land, and this is not just for the data center industry, but you're going to put it on a piece of land,

Starting point is 00:36:36 which doesn't have any power generation as well. And the data center industry is going to get very interested in that. because there's a source of power and we could put a data center next to it and plug it in and then they're off and running and get the customers happy and and develop our business in that way. But there are so many different aspects that need to be considered in terms of getting that particular source of energy up in running. So I'm going to stick my neck out. There'll be significant nuclear data center projects all over the United States by 2030. Yeah.

Starting point is 00:37:16 I just don't think you can't get enough power, you can't get it fast enough. And our customers are going to lean into the regulatory businesses and the regulatory agencies and say, you got to say yes to it because it's clean, it's big, it scales easy. And right now the only thing that makes it slow is the government. So I think our customers are going to lean into the, our customers will lean into the governments and say, you got to do this faster.

Starting point is 00:37:37 So I think nuclear is coming. I think it's coming fast just because of scale. And it's clean. All right, now you all got to stick your neck out, so we're gonna make Ligot go last. How long can the AI boom last? And by boom, right, you know, every year, what we thought was normal is now twice the size,

Starting point is 00:37:56 or three times the size. So this almost straight up slope that we're all fortunate to be living through right now, how long can the crazy AI boom last by region? Did he hit us? Okay. We, I think this, our, my regions, I think you see the time where,

Starting point is 00:38:12 we have the most advantage because because of the boom time now in US where all the AI departments are happening right now in the US. So the Asia Pacifics data center operator are preparing their data centers to what they call it AI ready data centers but yet the customer itself has not really come in yet to the okay so we have the luxury of time where we design data center with the specifications for AI and then when the AI company really come in into the markets. We have quite a number of AI-ready data centers,

Starting point is 00:38:48 which is a different, I would say, situations with what you have right now in the US, where you have to do a lot of free selling and they have to wait for maybe more than a year just to get an AI-ready data centers. We have that situation, so I'm in there. And I would say it's right now about 45% to 50%

Starting point is 00:39:08 of a new deployment of data center facility in Asia Pacific. are actually designed for an AI. AI ready. Right, Steve. We are in Hawaii, so I want to do like a surfing metaphor. Yeah, yeah, good, good. Yeah, yeah. I'm looking forward to this one too.

Starting point is 00:39:25 Yeah, yeah. So I would say the U.S. is the guy that's already, you know, he's in the tube. Yeah, he's surfing that wave. He's got the wave and he's, you know, looking good. Latam is probably the guy waiting back there, waiting in the back, waiting for the right wave. So AI wave hasn't hit Latam yet. I would say that maybe it's one or one very small AI deployment there.

Starting point is 00:39:47 We just got a neoclod deployment in Mexico, so it's just starting. But I think for Latam, we're probably a couple of years behind Asia PAC, but it's coming. And just only because the connectivity has to be there first, so the submarine cables that are being built once you have that, and they're in place now. You're going to have probably lower power costs than the U.S. You're going to have renewable energy. So I think a lot of companies in the U.S. are going to be looking at. at La Tam. And that time right now is it's different than the rest of the world and the Chinese clouds are growing very quickly. Yeah. Huawei, Bidance, Alibaba, Tencent, they've all doubled

Starting point is 00:40:24 up their capacity this past year in that town. So I'm not, you know, you're talking Chinese AI is going to be there much faster than USAI. Interesting. Interesting take. Ed, I'm going to make you go second to last. Yeah. In front of Liggett. David, how long can this crazy AI boom keep driving things in the regions you cover. Well, there's certainly no evidence of slowing down. I mean, difficult to tell how long it's going to go, but I think one interesting aspect is I've got a feeling, and this is just a personal opinion, that the enterprise is still scratching their heads and looking at AI and thinking, how can we integrate this to

Starting point is 00:41:03 our business? Because we cannot use an open platform because it's going to involve all of our customer data. And if you look at some of the very large financial services institutions with hundreds of thousands of millions of customers, once they start to engage with AI, I mean, it just could go and go and go and go. Yeah, it's certainly making a really big difference in the mirror where over the last sort of six months at least the hypers are kind of slowed a little bit down with contracting for capacity, but the Neo-Cloud operators, as we call them, the AI companies, those

Starting point is 00:41:39 me GP years of service organizations, they've kind of stepped into a breach and kept the market moving and kept the market growing whilst the hyperscalators have eased off the gas a little bit. As for how long, I mean, hit hose, it's gonna be fascinating to watch, but yeah, it'll be an interesting ride.

Starting point is 00:41:58 Well, you're gonna have to give us a time. Everybody's copping out. Eddie, here they. So, you know, and you guys have all mentioned this, I think you have to think about it in a few different ways. So the bulk of the demand, the lion's share of the demand they were seeing now is from those AI companies.

Starting point is 00:42:12 Now the large language modeling, which for the last, I don't know, two years, I've, and maybe you get the same thing from buddies who are not in our industry, who will send you an article and say, the bubble's popping, the bubble's popping. But when you think about it, the adoption, to David's point, the adoption of AI by these enterprises and finance and healthcare, all different, you know, taxonomies of industry, they're in their infancy with the adoption of AI. And they're going to need the LLM model can still continue, even as that agentic AI, as the inference side really grows. And then I think what's really driving a lot of the absorption that we've seen in the last 18 to 24 months has been these neoclows, you know, supporting companies like Anthropic and Open AI and these guys.

Starting point is 00:42:59 So I think, you know, if you think about it in a couple different sort of tranches, I think they're all, they all have very long runways. I think I believe that the LLM side will actually go on for longer than a lot of people believe, and it's because of that adoption agency that I have. I'd agree with you. I think the runway is much longer than people think. And I'm with you. I get calls all the time. Don't you think it's over?

Starting point is 00:43:23 The bubbles first. There's too much capital being spent. It can't keep up. And these guys, they have war chests like nobody's business. They're not even scratching the surface in how much capital they have. Deep pockets. Yeah, deep pockets. All right, Ligget, give us the real answer.

Starting point is 00:43:34 since you get to see the whole picture, how much longer does this AI boom going on? Yeah, I think we've got a three to five year window here. Dedy kind of hit one of the points, which was, hey, the U.S. right now is more mature than any of the other markets with stuff for various reasons. Some of that maturity has not even hit these different markets. You know, we're just starting to see some of these initial deployments come in, and they're typically smaller. watching those grow over time. You asked the question, how big is the requirement here? Well, those requirements sizes as those companies get more comfortable,

Starting point is 00:44:11 will grow and grow and grow in these regions. So that's one of the reasons I said. Number two, the US is a very large market, and we're still, you know, we're still third, fourth inning in the growth here. So there's a lot to still happen in the US. I think if there's any challenge right now, it will be how the supply matches the demand.

Starting point is 00:44:31 And so I think if we see any of this, it's probably more around, the supply is not mature enough right now. We don't have the alternative energy pathway yet to do that size. And so that's a headwind that we interface as an industry. But I think that's, to me, I go, that's where the focus is and should be. We track, you know, demand on a quarterly basis. We have deals that we track all across the world.

Starting point is 00:44:55 And that deal list that bumps to the next quarter each quarter. It's like getting longer and longer and longer because these deals take a lot of time. A gigawatt deal to finance? I mean, that is a math problem that only a few in our industry can really start well. And so I think if you want to think about 2026 and moving forward, the three things I would say is who has the power and where geographically is that? Number one, two, who has the money? These are billion, five billion dollar project. It's a lot of money.

Starting point is 00:45:27 So who has it and who can do the work? Number three, who has the chips? What users can actually put the chips in play and how quick. can I get them and put them in play. Those three things. All those really across the world, that will tell the story. Here, here. And I mean, I'm oversimplified.

Starting point is 00:45:41 Dramatic. No, but you're right. The building blocks have to be there. The capital has to be there. The chips have to be there. Otherwise, what we're talking about doesn't happen. And I completely agree. The fabs matter.

Starting point is 00:45:50 The capital matters. And to your point, right, I think the business models, you mentioned being in the third or fourth thing. The business models are all in the first inning. They're still figuring themselves out, but they are coming, and they're coming fast.

Starting point is 00:46:03 And I think, you know, as we all sit here suffering through going to work in Hawaii, it's very difficult in January. Yeah, it's very hard for us. I think we're going to be suffering here for, you know, at least until 2030 with crazy demand. Yeah. And the things that slow it down will be things that you're out of control. There's not enough chips. There's not enough capital of them because I think the demand is still in the early stages. Yeah, and one last.

Starting point is 00:46:26 Yeah. To finish, one last point on the, like on the U.S. demand specifically, you know, in 2023, we were, we tracked like, three gigawatts of absorption across the U.S. In 2024, we tracked 6.8 gigawatts of absorption. And 2025, just this last year that Ed and his team just finished up, we tracked 15.6. Those numbers are going up, sounds like. They're going up.

Starting point is 00:46:48 And you know, if you think about with some modest assumptions around a lease term and a least term and a least price, that's like $2 trillion of transactional value wrapped up into that 15 gig olds. So the value that's being created right now, with our industry across the world is incredible. And I think just for us as a team, that as our Hawk team, we get to be a part of it.

Starting point is 00:47:09 I know Compass is the same way. It's a privilege and fun to watch. Yeah, it's fun to watch. I think we're all lucky. I think we're all lucky to be alive in the 21st century. We're all lucky to be in a great industry. And it's fun to watch. And super great for you guys coming.

Starting point is 00:47:22 David, put it on the list. You and I are going to have a show just about Africa. We'll also have a show just about rugby. So we can do to get both of those on the schedule. Those are coming. as I think about futures. Guys, thank you so much for hanging out with us. We get to cover the whole world with one team.

Starting point is 00:47:37 David, love you, thank the world of your business. Love getting to talk with you and hang out with you. And thank you for bringing your team along and talking about what's going on in the world. It's been really great. And have a great rest of PTC as we hear. I'll get you all that for this. We're here on Saturday morning at the very beginning.

Starting point is 00:47:51 So enjoy the rest of PTC, guys. Thanks. Thanks. Thanks, Raven. Thank you very much. Thank you.

Not Your Father’s Data Center - Live From PTC ’26 | Data Center Trends with datacenterHawk

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.