At the southern tip of Malaysia lies the state of Johor, famous for its beaches and mountainous jungle. But there's a new boom industry in Johor: from data centers to power generation ayewith Microsoft Committing more than $2 billion on one such data center. Electricity has become the new oil for tech giants. A state-of-the-art AI data center may require 90 megawatts, enough to power thousands of American homes. With the proliferation of AI applications ranging from chatbots to AI agents, the needs are increasing. an industry association Data centers requiring 10 gigawatts (more than a hundred times today's largest demand) are being planned. Securing cheap, reliable power is now as important to tech companies as silicon chips.
In 2025, big tech companies will be scouring the world for kilowatts, megawatts and gigawatts. At board meetings, discussions about server capacity are becoming more dominated by discussions on grid capacity and the energy future. Nations endowed with abundant low-cost energy are taking advantage of this newfound advantage and devising policies to attract AI investment with the enthusiasm reserved for manufacturing.
Regions that have historically won the data center arc, such as Ireland and Singapore, have found it straining to explode their capacity ahead of the GenAI boom. This has created opportunities for unlikely competitors not only in Malaysia but also in Indonesia, Thailand, Vietnam and Chile. Latency is less important than keeping the electrons flowing.
Low-cost energy has long been a priority for companies: just as in the past companies co-located their refineries near ports, their factories near coal mines, AI companies are increasingly positioning themselves closer to that location. Trying to get where they can get consistent power – and in very good quantities. Prices.
Ultimately location matters. Half of the energy costs in a data center typically come from running cooling systems and air conditioning to keep servers from overheating. Colder climates or coastal areas will become more sought after as potential sites.
This allure of providing AI is so powerful that big tech companies are buying dirty electricity to do it, hurting their own and local economies.' Decarbonization targets are at risk,
There is intense competition among countries for data centers business. tax breaks are popular: More than half of the US states, including Arizona, New York and Texas, offer operators some type of tax breaks and even preferential rates for purchasing land and access to electricity. in Malaysia, green lane The Pathway initiative expedites construction approvals, eliminating red tape and faster completion of construction of data centers and power lines. Concessions in data regulations to allow information to flow freely.
This interplay between watts and algorithms is redrawing the map of global influence. This is a change as profound as the 20th century oil boom, but much less visible. No pipelines are being built, no tankers are changing routes. Instead, ordinary warehouses buzzing with servers are becoming new geopolitical hotspots.
The extent to which this changes the global impact is unclear. The real research on AI – where the breakthroughs happen – will remain in the research centers of San Francisco, London, Beijing and Paris. However, the data centers that take these algorithms to market will be low-margin, overpriced, and cheap-selling businesses.
This electro-diplomacy will be a major pillar for the next few years. Scaling AI is less about algorithms and more about electronics.
However, countries looking to take advantage of this moment must be careful; Their gains may prove fleeting as major economies look for a way to bring enough cheap, clean electricity online to encourage home hosting.
For today's energy-hungry providers of AI data centers, the challenge is to turn this fleeting advantage into a lasting edge. They will need to go beyond attracting data centers to building their own sustainable innovation ecosystems that can thrive long after “electricity congestion” subsides.