The Rural Revolution in Hyperscale Data Centers Driven by Generative AI
01 May 2024 - 9:24PM
The proliferation of generative artificial intelligence
applications is fueling unprecedented growth in the data center
market. Rapid development, deployment and adoption of generative AI
programs has left data center operators scrambling to stand up new
facilities and build out the additional capacity needed to meet
demand. Growth in the market should create new business
opportunities for rural broadband operators and electric
cooperatives as data centers expand beyond their typical urban
confines.
Data center hubs have historically been deployed in urban areas
given their access to power, water and integrated fiber networks.
Proximity to Fortune 500 companies and government agencies that
rely heavily on data computing and storage has also played a role
in data centers favoring urban markets. However, that model is
evolving quickly as data center operators are forced to evaluate
new markets to secure the energy resources needed to run
power-guzzling generative AI applications.
According to a new report from CoBank’s Knowledge Exchange,
generative AI is set to be a game-changer for the hyperscale data
center landscape, enabling new deployment strategies and ultimately
benefiting rural America in the process. Data center power
consumption is currently wreaking havoc on the energy complex and
contributing to a growing imbalance between supply and demand –
which is forcing data center operators into secondary and rural
markets.
“Data center operators have recognized that it’s easier to move
gigabits of data than electrons and have entered locations where
land is available and additional power is more attainable,”
said Jeff Johnston, lead digital infrastructure economist with
CoBank. “Over time, we expect new data centers will move outside of
secondary markets and deeper into rural America.”
Developing trends in the data center market, including the need
for more power, data computation and storage capacity and internet
connectivity, should represent growth opportunities for some rural
broadband operators and electric companies, Johnston added.
The recent swell of attention surrounding generative AI appears
to be justified as the technology is widely expected to have
staying power. Amazon, Microsoft, Google and Meta are investing
billions of dollars into generative AI, which will be deployed
horizontally across devices and transcend industries delivering
operational efficiencies as well as new products and services.
A breakthrough graphical processing unit chipset technology from
semiconductor provider Nvidia is largely responsible for the rapid
growth of generative AI. The platform enables large language models
to run deep learning algorithms that can recognize, summarize,
translate, predict and generate content using enormously large data
sets. Generative AI applications leveraging GPU chipsets require
significantly more computing resources than legacy AI applications
running central processing unit chips.
For instance, the International Energy Agency has indicated a
request to ChatGPT requires 2.9 watt-hours of electricity. That’s
nearly 10 times as much as the average Google search. Those
intensive power requirements, combined with the growth in AI data
centers, are driving the supply and demand imbalance in energy
markets.
Data center fueled demand for electricity is growing so fast it
is forcing some states and power providers to dramatically revise
their demand forecasts in real time. And the CEO of chip-design
company Arm suggested that without greater efficiency, AI data
centers could represent as much as 20% to 25% of U.S. power
requirements by 2030, up from ~4% today.
“The demand for new data centers, energy and broadband show no
signs of slowing down, and rural America will have the opportunity
to help serve this need,” said Johnston. “Some of these
opportunities will carry risk for rural infrastructure providers
and require capital expenditures. So careful analysis is imperative
for those looking to enter the market. It’s not for everyone, but
the growth opportunity cannot be denied.”
Watch a video synopsis and read the report, The Rural
Revolution is Coming as Generative AI Drives Hyperscale Data
Centers.
About CoBank
CoBank is a cooperative bank serving vital industries across
rural America. The bank provides loans, leases, export financing
and other financial services to agribusinesses and rural power,
water and communications providers in all 50 states. The bank also
provides wholesale loans and other financial services to affiliated
Farm Credit associations serving more than 77,000 farmers, ranchers
and other rural borrowers in 23 states around the country.
CoBank is a member of the Farm Credit System, a nationwide
network of banks and retail lending associations chartered to
support the borrowing needs of U.S. agriculture, rural
infrastructure and rural communities. Headquartered outside Denver,
Colorado, CoBank serves customers from regional banking centers
across the U.S. and also maintains an international representative
office in Singapore.
*Jeff Johnston is available for interviews with the media
upon request.
Corporate Communications
CoBank
news@cobank.com
Julie Davis
CoBank
202-215-1354
Dave Harding
Knowledge Exchange Media Relations
262-825-7926
david.h.harding@outlook.com