250. Inside the US Datacenter exuberant buildout - Oct26

SPEAKER_1 (0:07)

With Laurent Segalen from London and Gerard Reid from Berlin, this is Redefining Energy.

Gerard Reid (0:13)

Today on Redefining Energy, we're going to talk about data centers, and in particular, we're going to look at the US market and what's going on there.

Laurent Segalen (0:20)

Gerard, if you look at the global numbers, it's insane.

The world-wide datacenter CAPEX is now expected to surpass 3 trillion by 2030, doubling what we have right now. It's the biggest GDP bet in America since the railroad. But first of all, from a partner.

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Laurent Segalen (1:08)

Back to the show. And it's burning cash. It's insane. So I've got a few numbers.

KKR, Credit, estimate that AI linked debt for Data Center, 600 billion. AI Infrastructure Company, 40% of the S&P 500 AI related companies, 49% of investment grade bonds insurance. And if you look at the private market, 87% of VC funding goes to AI. Of course, we've seen the Anthropic filing for IPO. I mean, it's wonderful.

600 billion of commitment to Amazon, Google and Microsoft XAI. The amount of cash is crazy.

Gerard Reid (1:49)

And I think it's really important to dig into this team because it's highly complex.

Yeah, I know that. And Laurent, as a result, it's really important to dig into this team. And that's why it was really great to get Eugene McGrane to come on the podcast, to have a discussion around this topic.

Laurent Segalen (2:05)

Eugene is executive managing director at Cushman Wakefield, which is one of the world's largest real estate broker.

They used to do warehouses and they used to do office. And somehow, they acquired the expertise to do data centers. Now, when somebody say, okay, that data center is worth $100 billion, in fact, you get 50% chips and then you get 20% power and then the rest is cooling and everything. So it doesn't enter in the chips per se, but you organize everything that's around the world, the permitting, the connection and so on. So I think it's very important to see that data center wave from the inside.

Gerard Reid (2:45)

Absolutely. So let's bring them on the show. Eugene, great to have you on the show.

Eugene McGrane (2:50)

Oh, thanks for having me.

Laurent Segalen (2:51)

Eugene, a very simple question to start with. You are a real estate expert. How did you become a data center specialist?

Eugene McGrane (3:01)

Well, like all things in life, a series of coincidences. I've been a commercial real estate broker for 20 plus years now. I started in California and I was, at the beginning, just an office broker, you know, working for corporations and dealing with their office leases, which are kind of just complex contract negotiations and market knowledge. Through that time, I worked for companies like PG&E and people like Chevron, dealing with their real estate issues and assets. And I was very fortunate. I had a dear friend at Chevron and he recommended that I, you know, I wanted to learn more about their business. He told me to read Daniel Juergens' book. So three books later, I felt like I knew enough about the energy business to not know much. And in 2021, my wife, who's from Rhode Island, needed to get home. And so we moved our family across the country. In that very unsettled time in the world where, you know, people were not signing new office leases or, you know, warehouse leases with much certainty. Political climate at the time made a giant push for offshore wind. And there was a commitment to do 35 gigawatts of power and deliverables and contracts were done and investors were attracted.

And, you know, with my background, I could see two things. One, that this was real, that the investments were gonna be made. And two, that the companies, especially the Danes, were coming over with a completely different understanding of the power grid and how development worked here as to how it worked in Europe. And so, I started advising those companies on what the kind of different obligations were gonna be in order to reach the development. They had interconnections going through towns that they didn't really understand the permitting process and what the obstacles were gonna be.

And so, as I was doing that, I was doing a lot of infrastructure level power, because that's what those developments were. And then when Chatchie PT hit the market, and our kind of worlds changed, I just happened to be one of those people that was working with companies that were doing 200, 300 megawatt projects, and kind of understood the basic stuff that those people did, which was not typical in the data center world prior to that. A large requirement was five megawatts, 20 megawatts. All of a sudden, we were looking at 200 megawatts was, oh, maybe that's not enough. So it was 200 to 500 to gigawatt to now what it is.