BlackRock and Microsoft plan US$30b fund to invest in AI energy...
Artificial intelligence (AI) is placing significant demands on data and power supplies. BlackRock is gearing up to launch a more than US$30 billion artificial intelligence investment fund in collaboration with technology giant Microsoft. The aim is to build data centers and energy projects to meet the increasing demands arising from AI.
Financial Partnership
The financial partnership involves BlackRock's new infrastructure investment unit, Global Infrastructure Partners, and is set to be one of the largest investment vehicles ever raised on Wall Street. Microsoft and MGX, an Abu Dhabi-backed investment company, are the general partners in the fund. Nvidia, a rapidly growing chipmaker, will provide advice on factory design and integration.
Addressing Energy Demands
The Global AI Investment Partnership is primarily focused on addressing the immense power and digital infrastructure requirements for developing AI products. The fund aims to raise up to US$30 billion in equity investments and leverage that to support an additional US$70 billion in debt financing.
Impact on Energy Sector
BlackRock sees the energy sector as a top opportunity for growth. Larry Fink, BlackRock's chief executive, emphasized the importance of mobilizing private capital to build AI infrastructure such as data centers and power to unlock a significant long-term investment opportunity.
Role of Microsoft
Microsoft has also been active in the energy sector, with commitments to back $10 billion in renewable electricity projects. The company aims to ensure 100% of its energy consumption is matched by zero-carbon energy purchases by 2030.
Future Investments
Large asset managers are recognizing the increasing demand for energy to power generative AI and cloud computing. The International Energy Agency predicts that global electricity consumption by data centers could double by 2026 compared to 2022 levels.
In the US, where one-third of the world's data centers are located, electricity demand is rising rapidly. Private capital investments are seen as crucial to fund essential infrastructure to support the growing needs of AI and data centers.
