AI expansion strains power grids, Blackstone Inc. CEO Schwarzman highlights at symposium

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Steve Schwarzman

16th April 2024 – (Melbourne) During the Asia Pacific Financial and Innovation Symposium in Melbourne, Blackstone Inc. CEO Steve Schwarzman highlighted the burgeoning strain artificial intelligence (AI) is placing on global power infrastructures. As data centres multiply to support escalating AI demands, the industrial world faces critical challenges in managing power resources, he noted.

Schwarzman, speaking via webcast, described the current fervour to build AI-supporting facilities as unprecedented. “The scale of investment is nothing short of breathtaking,” he commented, emphasising the rapid global spread of these developments.

In 2021, Blackstone acquired the data center operator QTS in a deal valued at $10 billion, significantly bolstering its footprint in the digital infrastructure market. These data centers, according to Schwarzman, not only consume vast amounts of electricity but also represent substantial investment opportunities amidst growing power shortages.

“Different states in the US are starting to experience electricity shortages,” Schwarzman revealed, pointing out the dual pressure from AI and electric vehicles on power supplies. He sees these challenges as lucrative avenues for investors, with data center projects potentially offering returns of 20% on 30-year contracts.

However, the Blackstone chief also voiced concerns regarding the rapid advancement of AI technology. According to him, the apprehension is widespread among his peers, leading to an unusual consensus on the need for regulatory frameworks. “There is a genuine fear among those at the forefront of this technology,” he stated.

Furthermore, Schwarzman shared insights from a recent conversation with Chinese President Xi Jinping, who advocated for global standards in AI regulation. The lack of uniform regulations across countries could lead to inconsistencies and challenges in managing the technology’s impact.