Big technology companies will scour the world in search of cheap energy

At the southern tip of Malaysia lies the state of Johor, famous for its beaches and mountainous forests. But Johor has a new booming industry: data centers for power generation Amnesty Internationalwith Microsoft More than $2 billion has been allocated to this data center. For the tech giants, electricity has become the new oil. A high-end AI data center might need 90 megawatts, enough to power tens of thousands of American homes. As AI applications proliferate, from chatbots to AI agents, the needs are growing. One industrial union It plans data centers requiring 10 gigawatts (more than a hundred times the largest demand today). Securing cheap, reliable energy is now crucial for technology companies such as silicon chips.

In 2025, big tech companies will scour the world in search of kilowatts, megawatts and gigawatts. At board meetings, discussions of grid capacity and the future of energy increasingly overshadow discussions of server capacity. Countries blessed with abundant low-cost energy are taking advantage of this newfound advantage and formulating policies to attract AI investments with the enthusiasm previously reserved for manufacturing.

Regions that have historically won data center space, such as Ireland and Singapore, found their capacity strained to the point of explosion before the GenAI boom. This has created opportunities for unlikely competitors, not only Malaysia, but also Indonesia, Thailand, Vietnam, and Chile. Potential is less important than maintaining the flow of electrons.

Low-cost energy has long been a priority for companies: Just as companies in the past located their refineries near ports, and their factories near coal mines, AI companies are trying to position themselves near places where they can get electricity consistently — and at great cost. Prices.

Location is important in the end. Half of a data center’s energy costs typically come from running cooling and air conditioning systems to prevent servers from overheating. Cooler climates or coastal areas will begin to be in demand as potential locations.

This pull to deliver AI is so strong that big tech companies are buying dirty energy to fulfill it, putting their own and local economies at risk. Decarbonisation targets are at risk.

Countries compete fiercely for data center business. Tax breaks are very popular: More than half of US states – including Arizona, New York and Texas – offer operators some form of tax relief and even preferential rates for land purchases and energy commitments. in malaysia, Green lane Pathway initiatives accelerate construction approvals, cutting through red tape to speed up construction — and power lines — of data centers. Data regulations privileges to allow information to flow freely.

This interaction between WhatsApp and algorithms is redrawing the map of global influence. It is a transformation as profound as the oil boom of the twentieth century, but much less obvious. No pipelines were built, and oil tankers did not change their course. Instead, unmarked repositories crowded with servers have become the new geopolitical hotspots.

The extent to which this shift in global influence leads is unclear. The real research on AI — where the breakthroughs happen — will remain in research centers in San Francisco, London, Beijing, and Paris. However, the data centers that take these algorithms to market will be low-margin, high-cost businesses that are cheap to sell.

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

However, countries exploiting this moment should be careful; Their advantage may be fleeting as dominant economies figure out how to bring cheap, clean energy online in sufficient quantities to stimulate local hosting.

For today’s power-rich AI data center providers, the challenge is to turn this fleeting advantage into a sustainable advantage. They will need to go beyond attracting data centers to building their own lasting innovation ecosystems capable of thriving long after the “electricity rush” subsides.