The Final Day 1 panel discussion at the RBC Capital Markets Global Communications Infrastructure Conference hosted by Jonathan Atkin and his research team featured perspectives from industry heavy hitters on what’s looming on the horizon for the data centers space and the role that AI and accelerating growth trends play in the industry’s evolution. Each speaker had wide-reaching global insights to share.
Panelists:
Prashant Murthy – Chief Financial & Commercial Officer, AirTrunk
Nick Wang – Chief Financial Officer & Chief Commercial Officer, WinTrix DC Group (formerly known as Chindata Group, the parent company of Bridge Data Centres)
Udhay Mathialagan – Managing Partner & CEO, Global Data Center Group, Brookfield
Fran Federman – Chief Investment Officer, CyrusOne
Val Walsh – Vice President, Microsoft Cloud Operations and Innovation, Microsoft
Moderated by Madonna Park – Chief Financial Officer, Switch
Theme 1: Ways the evolving demand growth dynamic has changed how major players operate around the world
Val Walsh, Microsoft – Since I joined Microsoft in March 2020, we’ve seen balanced, strategic growth. It’s been a good mix in all regions. AI growth is prevalent in the US and there’s some in Europe. We still have a small footprint in Asia. We’re seeing strong growth across hyperscale and colocation space as well – 2X-4X growth in 5-10MW space.
Udhay Mathialagan, Brookfield – AI has triggered a lot of demand, but it’s more than just AI demand is quite strong in many areas. Cloud has continued to grow as well, and we’re also seeing a lot of demand in our retail colocation businesses, like sub-10MW. And AI growth in US has not played out the same way in other regions.
Nick Wang, WinTrix DC Group – We want to be a global company, but we’re still very much APAC-focused. Our company only has 6-7 year history, yet our incremental volume growth from 40MW to 800MW today represents 20X magnitude growth. Most of our recent growth has been from hyperscalers like Google and Microsoft, as well as some Asian players.
Prashant Murthy, AirTrunk – We’re also Asia-focused only. Both hyperscaler and cloud growth are very strong, and in both cases AI-driven. AI represents well over 50% of the growth in our contracted base. AI demand is coming to Asia quickly.
Theme 2: Growth Challenges Across Data Center Landscape
- Prashant Murthy, AirTrunk – Land, water and power are the primary differentiators now. Partners like ours (Blackstone) are eager to deploy and seeking supply chain partnerships, rather than just taking supply. There’s no one-size-fits-all option, and you need to think about community and local impact. We’re also seeing that utilities are starting to observe where providers are behind in capacity.
- Udhay Mathialagan, Brookfield – It’s about trust and having all the ingredients to deliver on time. Our customers have their own supply chains, so we must understand the interconnectedness of the risk. Talent is another big issue – finding the right people and connecting them. They may have varying styles, but they still must deliver on time. Our view is that the industry will go down the path that scale allows.
- Fran Federman, CyrusOne – At CyrusOne, consistency has been our differentiator. As technology is changing, we must think about how we deliver that technology. We’re always building something, but if it doesn’t operate properly, that doesn’t work for any of our customers. Site specifics matter, as we’ve seen play out in other industries like life sciences. Not every office building can be converted to a life science building. Same here with data centers. They require specific site aspects and skill sets.
- Nick Wang, WinTrix DC Group – Capital management is always important. It’s really about end-to-end management, since something can turn sequentially into peril. APAC is a good region for data center development because of the local tech demand and abundance of power. The coverage ratio is triple-digit vs. double-digit for the US and other western markets.
- Val Walsh, Microsoft – Labor on construction sites is a big challenge, and it’s worse on larger sites, or if we have 4-5 projects going on in the same location. Access to power is another big issue. If multiple lessors are asking for 500 MW, it will be harder to get all of them and along the way, government officials will change rules and regulations, which adds time. Then time becomes our biggest problem. So, there are a lot of constraints. Ultimately, no matter how many orders we put in a year, there are only so many generators coming out. So, it’s tough to plan and time it, and hyperscalers need specificity regarding time to market.
Theme 3: The Importance of Renewable Energy
- Udhay Mathialagan, Brookfield – Renewable energy is super important because there is almost no way we solve power constraints without alternative options like nuclear. We just entered into a new deal with Microsoft to develop more than10MW of renewable energy over time. We’re convinced nuclear will play an important long-term role in renewables. There are good things going on with smaller reactors. Brookfield Renewable owns Westinghouse Electric Company, the world’s largest nuclear business, and we see nuclear as a more near-term solution for the US and a longer-term solution in Asia.
- Prashant Murthy, AirTrunk – at AirTrunk, we’re approaching renewables in partnership with customers. We announced a collaboration with Microsoft to facilitate local renewable energy development. We have renewables deals with customers in Australia and Japan as well. You can’t think of it as a tomorrow thing – you have to plan side-by-side with customers about how renewables work into the long-term story.
- Nick Wang, WinTrix DC Group – In Asia, we see solar panels, wind farms and power storage systems as near-mid-term solutions and nuclear as more long-term. That’s dictated more by construction cycle, which can be as long as 10-plus years for nuclear.
- Fran Federman, CyrusOne – There is a lot going on with nuclear reactors, particularly SMRs. With so many clients making net zero pledges by 2030, we must prioritize renewables now. We also have to factor in issues like renewables storage. We’re all becoming mini experts in power along with the data center business.
