Big Tech scours the globe in its search for cheap energy

At the southern tip of Malaysia is the state of Johor, renowned for its beaches and mountainous jungle. But Johor has a new boom industry: data centers to power generators AIwith Microsoft committing more than $2 billion in just one such data center. For the tech giants, electricity has become the new oil. A state-of-the-art AI data center might need 90 MW, enough to power tens of thousands of American homes. With AI applications proliferating, from chatbots to AI agents, the needs are growing. An industrial consortium it is planned for data centers that require 10 GW (more than a hundred times the demand of today’s largest). Ensuring cheap and reliable power is now crucial for technology companies such as silicon chips.

In 2025, big tech companies will scour the globe for kilowatts, megawatts and gigawatts. In board meetings, discussions about server capacity are increasingly overshadowed by discussions about network capacity and the energy future. Nations blessed with abundant, low-cost energy are seizing this new advantage and crafting policies to attract investment in AI with the zeal once reserved for manufacturing.

Regions that have historically won the data center ark, such as Ireland and Singapore, found their capacity stretched to burst before the GenAI boom. This created opportunities for unlikely competitors, not just Malaysia but Indonesia, Thailand, Vietnam and Chile. Latency is less important than keeping the electrons flowing.

Low-cost energy has long been a priority for companies: as companies in the past co-located their refineries near ports, their factories near coal mines, AIs are trying to position themselves near where they can get electricity consistently – and in large quantities. prices

Location ultimately matters. Half of the energy costs in a data center typically come from running cooling and air conditioning systems to keep servers from overheating. Cooler climates or coastal areas are beginning to become more in demand as potential sites.

This attraction to provide AI is so powerful that the big technological companies buy raw power to meet it, putting their economies and local “. decarbonization targets at risk.

Countries compete heavily for data center business. Tax rebates are popular: more than half of the US states – including Arizona, New York and Texas – offer operators some form of tax break, as well as preferential rates to buy land and undertake to access power. In Malaysia, Green Lane Pathway initiatives speed construction approvals, cut red tape for fast construction and power lines for data centers. Grants of data regulations to allow information to flow freely.

This interaction between watts and algorithms is redrawing the map of global influence. It is a change as profound as the oil boom of the 20th century, but much less visible. No pipelines were built, no tankers changed course. Instead, the non-descript warehouses that roam with the servers are becoming the new geopolitical hotspots.

The extent to which this changes global influence is unclear. The real research on AI, where the developments happen, will remain in the research centers of San Francisco, London, Beijing and Paris. Data centers that take these algorithms to market, however, will be a low-margin, pile-it-high business and sell cheaply.

This e-diplomacy will be a key pillar for the next two years. Scaling AI is less about algorithms and more about electronics.

However, nations that capitalize on this moment must be careful; their advantage may be fleeting as dominant economies figure out how to bring online clean and cheap energy in sufficient quantities to encourage domestic hosting.

For today’s AI-powered data center providers, the challenge is to turn this fleeting advantage into a sustainable advantage. They need to go beyond the lure of data centers to build their own sustainable innovation ecosystems that can thrive long after the “electricity race” subsides.