Microsoft and BlackRock partnership launches GAIIP project, which aims to raise $100 billion for AI data centres and electricity infrastructure.
TakeAway Points:
- The Global AI Infrastructure Investment Partnership (GAIIP), a partnership between Microsoft and BlackRock, aims to generate up to $100 billion for electricity infrastructure and AI data centres.
- The first goal is to raise $30 billion in private equity, with the possibility to leverage that amount to $100 billion through debt financing from MGX and GIP.
- With data centres estimated to consume more than 1,000 terawatt hours of electricity globally by 2026, the program aims to alleviate significant capacity limitations in AI infrastructure.
Major AI Investment Initiative
Microsoft and BlackRock have announced a significant collaboration to develop data centers and the energy infrastructure required to support artificial intelligence (AI). The initiative, named the Global AI Infrastructure Investment Partnership (GAIIP), aims to pool together up to $100 billion in investments.
The initial target is to gather $30 billion in private equity capital, with the potential to leverage this amount to $100 billion through debt financing. The partnership includes Global Infrastructure Partners (GIP), an infrastructure investor being acquired by BlackRock, and MGX, a tech investor from the United Arab Emirates.
Microsoft CEO Satya Nadella emphasized the importance of this initiative, stating, “We are committed to ensuring AI helps advance innovation and drives growth across every sector of the economy.” He added that the collaboration brings together financial and industry leaders to build future infrastructure sustainably. The demand for data centers equipped with Nvidia graphics processing units (GPUs) to run generative AI models, such as OpenAI’s ChatGPT has surged, creating a bottleneck for new facilities due to the high power consumption of these GPUs.
Financial Commitments and Goals
The GAIIP aims to address the growing power and digital infrastructure demands of AI products, which are expected to face severe capacity bottlenecks in the coming years. BlackRock CEO Larry Fink highlighted the long-term investment potential, stating, “Mobilizing private capital to build AI infrastructure like data centers and power will unlock a multi-trillion-dollar long-term investment opportunity.” The fund, which would be one of the largest investment vehicles ever raised on Wall Street, marks GIP’s first major fund since agreeing to be acquired by BlackRock for $12.5 billion earlier this year. The deal is expected to close on October 1.
BlackRock has identified the energy sector as a significant growth opportunity. Fink noted in a letter to investors that he has never seen more demand for energy infrastructure in his nearly 50 years in finance. The fund aims to meet the increasing energy demands driven by AI and cloud computing. Earlier this year, Microsoft committed to backing $10 billion in renewable electricity projects built by Canada’s Brookfield Asset Management, aligning with its goal to ensure 100% of its energy consumption is matched by zero carbon energy purchases by 2030.
Resolving energy consumption
The computing power required for AI significantly exceeds that of previous technological innovations, straining existing energy infrastructure. The International Energy Agency estimates that global electricity consumption by data centers could surpass 1,000 terawatt-hours by 2026, more than double the amount used in 2022.
In the United States, which hosts one-third of the world’s data centers, electricity demand is rising rapidly for the first time in two decades, driven partly by these energy-intensive facilities. A report from Grid Strategies indicates that five-year projections for electricity demand growth in the US have nearly doubled over the past year, increasing from 2.6% to 4.7%.
Brad Smith, Microsoft’s president, underscored the necessity of capital investment to accelerate AI infrastructure development, stating, “The country and the world are going to need more capital investment to accelerate the development of the AI infrastructure needed. This kind of effort is an important step.”
