Group 6: What are Data Centres, Why are They Growing and Explain the Projections for the Future Data Centre Build out Around the World?

Question 1

what are data centres

Answer 1

• physical facilities that store large amounts of data for individuals, governments, and businesses
• they are mainly responsible for storing, processing, and distributing data

Question 2

where is the largest data centre in the world

Answer 2

china-telecom inner mongolia

Question 3

why are data centres important

Answer 3

• they are crucial for storing and managing the vast amounts of data that organizations depend on for their daily operations
• they support data storage and management, applications and security
• large businesses can’t run effectively without data centres
• they are the backbone of the digital economy

Question 4

what growth are there for data centres

Answer 4

• they are located all over the world
• have grown 15-25% this year

Question 5

why are data centres growing

Answer 5

• people are generating a much higher volume of data, so they need more data centres to store, manage, and process it
• ex. generating from social media and online transactions
• higher adoption of cloud-based services (when people are putting things on the cloud and accessing it there instead of have it on their devices)
• everything is becoming more digitized: work has been more remote since the pandemic, online platforms like netflix and youtube generate a lot of data
• increase use of ai, which require a lot of computational power and data storage (since they process large data centres)

Question 6

what is a challenge to growth of data centres

Answer 6

• limited supply
• power supply shortages
• government regulations and limitations

Question 7

how is limited supply a challenge

Answer 7

• there is limited land, especially in densely populated areas like major cities
• also expensive
• make it hard to expand in areas where demand for data is highest
• power supply shortage and government limitations also prevent the building of more data centres

Question 8

how is power supply shortage a challenge

Answer 8

• in many regions, local power grid may not have enough energy to power data centres
• there are rising energy costs that make it more expensive to run data centres

Question 9

how are government limitations a challenge

Answer 9

governments have been increasingly focused on reducing carbon footprints and energy consumption, requiring data centres to meet the standards they set, which can increase construction and operational costs

Question 10

what is the environmental impact of data centres

Answer 10

• an ai search uses x10 more electricity then a google search
• since there is a limited availability of clean energy, companies are forced to use coal energy
• raises the issue how companies are saying they are being more environmentally friendly, but then need to use nonrenewable resources to power their data centres since they need a lot to power it

Question 11

how are data centres financed

Answer 11

• through bank loans and private equity
• private equity are investing in big data centre companies & land
• they are doing it because there is a high demand for space, and they lease the lease out, and they invest in it because there is a projected growth for it

Question 12

what are some investment risks of data centres

Answer 12

• outdated technology
• stranded assets
• valuation concerns

Question 13

how is outdated technology an investment risk

Answer 13

• many data centres can’t support AI’s power and cooling needs
• its too expensive and impossible to update older centres to meet these needs

Question 14

how is stranded assets an investment risk

Answer 14

• older facilities would struggle to keep tenants (companies don’t want to keep their data in old places that can’t keep up with their amount of data and needs)
• these leads to financial losses and decommissioning obsolete centres

Question 15

how is valuation concerns an investment risk

Answer 15

• there is uncertainty about the future value of the data centres
• and the high ai driven valuation of data centres may not hold up

Question 16

how do data centres effect finance

Answer 16

they are used for transactions, cloud storage, and AI implications

Question 17

what are future projections of data centres

Answer 17

• 10% compounding yearly growth until 2030
• hundreds of billions of dollars are being invested
• capacity is expected to double over the next 5 years
• 20% of space in data centres are being used in ai
• many companies are investing billions to build their own data centres that they can use themselves, rent out, or both

Question 18

what are the environmental plans for data centres

Answer 18

• they want to go green
• use more renewable energy and liquid cooling systems
• it can reduce companies’ carbon footprint
• reduce their operating expenses
• enhance brand reputation

Question 19

where would be good places to build more data centres

Answer 19

• texas
• there is desserts
• lots of sun - for solar energy
• lots of uninhabitable land

Question 20

what would be factors a company would consider in determining where to locate their data centre

Answer 20

• the geography (natural disasters)
• taxes
• rent
• state regulations
• weather (lots of sun? lots of wind? lots of rain?)
• land (if there is a lot of it)

Question 21

what are hyperscale data centres

Answer 21

• they are larger scale and highly efficient data centres that are designed for massive computing and storage needs
• they focus heavily on energy efficiency since they are so big
• they can support the cloud services, AI and big data
• they are built for maximum reliability

Question 22

what are advantages in investing in data centres

Answer 22

• high and growing demand from the continued increase in cloud computing, ai, etc.
• they operate on long term leases (around 7.5 years) which create stable and recurring revenue streams