BaRupOn CEO on the Power Crunch Threatening AI’s Buildout

SPEAKER_1 (0:00)

I want to bring Sam back into the conversation here, and welcome in our next guest, and turn our attention to the increasing pushback that we're seeing against data centers and the build out. Joining us to help us take a closer look today, Balaji Tammabattula, the COO of BaRupOn. Balaji, thank you for being with us today. Now, opposition to data centers continues to grow as new data says that 45 US data center projects worth $68 billion were either blocked or delayed in just a three month period.

Is this, as you look at it, becoming one of the biggest bottlenecks to America's AI buildout? And how much could it potentially slow the industry's expansion?

Balaji Tammabattula (0:39)

It is a serious problem. And I think this is just getting started right now.

You know, just last month, Governor Abbott put a complete pause on new data centers in Texas. And that came in as a big shocker. Previously there was a slowdown, but now it was a complete pause. And we were investing billions of dollars into the Permian Basin, and then all of a sudden, all our projects had to be put on a pause. And now the focus has shifted to other states that are friendly. Like, you know, right now, we're focusing more on Wyoming, North Dakota. We're not seeing the same problems over there right now, but I think what's happening across the board, there's going to be similar problems in other states as well.

Sam (1:21)

Could it be seen, though, right now, Balaji as fundamentally a healthy thing? Because we were just talking about one of the companies in the business of opticals being sold out. I mean, they've got a huge amount of visibility. You've got the memory component makers who have a huge amount of runway, soaring prices as well. They're running out of capacity.

You obviously haven't got enough power for all of this as far as the energy needs. So doesn't this turn what has really largely been a vertical demand that some believe is unsustainable for a lot of these companies into something a lot more elongated if there is a sort of slow down or at least more of a process to get this stuff up and running?

Balaji Tammabattula (2:08)

In a way, yes, it is a healthy thing because there were like a lot of speculative projects.

And now because of all the slow down, all the speculative projects are falling off the grid. And real companies that are sustainable are making investments. So the conversation previously was about energy. And energy is the most important thing. Now companies that are truly able to build real infrastructure, they're actually coming up. So in a way, it is sustainable. And to a certain extent, what's happening is a good thing because now everyone understands that community and overall the AI build out have to be done in a certain way. And it's going in the right direction right now.

SPEAKER_1 (2:54)

And Balaji, let's talk about the energy concerns because these are a lot of the drivers of the NIMBY movement and a lot of the opposition that we're seeing. There's big question marks about who is paying to subsidize the grid and how it's going to impact the homes that are closest to the data center's concerns about electricity bills, water consumption, noise and environmental impacts. We're even seeing in Finland, they're pausing the build out for environmental concerns. Which of these concerns do you feel are the ones that are justified versus the ones the industry has simply just done a poor job addressing?

Balaji Tammabattula (3:33)

I think the major concern, all the others that you just mentioned, they're all valid concerns, but the biggest of them all is energy.

There's not enough energy and these data centers tapping into the grid was a major problem for the community because there's only just so much that the grid can support. Right now, there's not enough and when there's more consumption, the consumers and the communities end up paying more.

Last one year, all these data centers, including us, our entire focus is investing into the infrastructure, and building power plants that are not connected to the grid behind the meter, on gas. Nuclear is something that is looking very optimistic, though it's going to be like four or five years away down the road. But all those technologies and investments are going into the right place. Energy is the biggest concern. The others are concerns as well, but not as big as the demand for energy.

Sam (4:36)

Balaji, what do you expect happens beyond the midterms? Because there is a thinking here on Wall Street, it's not consensus, but you do hear it a lot. In fact, we had a guest on just the other day who was talking about this, that all this data center talk and pushback basically disappears after the elections. Is this more than just trying to get our politicians to obviously get this on the table as far as a campaigning issue?