Australia data centre demand to be boosted by Artificial Intelligence

30 April 2024

The global data centre industry is poised for rapid expansion over the next five years, driven by the increasing demand for cloud storage capacity and the emergence of generative AI, according to the latest global Data Centres report from JLL.

“This growth presents significant opportunities for investors and collaboration with developers and operators,” said JLL’s Head of Data Centres – Australia Tom Madigan.

Consumers and businesses globally are expected to generate twice as much data in the next five years as all the data created over the past 10 years. This growth presents both an opportunity and a challenge for real estate investors, developers and operators, according to JLL’s Data Centres 2024 Global Outlook.

“As consumers and businesses generate twice as much data as in the past decade, the need for data centres and storage capacity is projected to continue growing. Developers and investors are increasingly turning to data centres as a promising asset class,” Madigan said.

He said the rise of generative AI is expected to transform the data centre market, impacting not only the number of new data centres needed but also their design and location which will differ to the existing cloud focused data centres.

“With the increasing computational power required for AI workloads, data centre operators adapt their facilities to support higher rack densities and specialised infrastructure,” Madigan said.

Power sourcing and sustainability have become crucial considerations for the data centre industry. With data centres and data transmission networks accounting for 1% of energy-related greenhouse gas emissions, operators are under mounting pressure to improve efficiency and procure sustainable power options, the report found.

JLL’s Senior Director, Industrial & Logistics – Australia, Matt Lee said the report explores how leading operators are responding to this heightened emphasis on sustainability, with a focus on low-carbon strategies and power purchase agreements (PPAs) for renewable energy.

“Data centre operators are exploring alternative power sourcing strategies for onsite power generation including small modular reactors (SMRs), hydrogen fuel cells and natural gas

” Operators are proactively seeking ways to boost efficiency and procure sustainable power options. Our report examines how leading operators innovate in response to the heightened emphasis on sustainability,” Lee said.

With the growing demands of Artificial Intelligence (AI), data centre storage capacity is expected to grow from 10.1 zettabytes (ZB) in 2023 to 21.0 ZB in 2027, a five-year compound annual growth rate (CAGR) of 18.5%.  A zettabyte is 1,000,000,000,000,000,000,000 or 1 sextillion bytes. Not only will this growth generate a need for more data centres, but generative AI’s greater use of energy will require more energy-efficient designs and locations. The need for more power will require data centre operators to increase efficiency and work with local governments to find sustainable energy sources to support data centre needs.