When Microsoft invests in Europe, the company also pays attention to a major upcoming challenge for the data center industry: energy supply. Having recently announced a series of large investments in the continent, Microsoft’s President indicated that he recognizes nuclear power as an important component of the solution and an invaluable source of clean energy looking forward.
A 3.2 billion dollar investment in Sweden
On June 3rd, Microsoft’s vice chair and president, Brad Smith, announced alongside Sweden’s prime minister Ulf Kristersson, the largest investment in the country in Microsoft’s history.
The American tech company, a major investor and partner of Open.AI, the creator of the generative artificial intelligence tool ChatGPT, will invest 33.7 billion Swedish crowns (approximately 3.2 billion dollars) in cloud infrastructure and artificial intelligence in the country.
The investments will include a “training initiative to boost the AI skills” of 250,000 people in the Nordic country. Microsoft will also expand its data centers in Sandviken, Gävle, and Staffanstorp, building on previous community investments and partnerships in Sweden.
This announcement comes a few months after Sweden’s government established an artificial intelligence commission last December to “strengthen Swedish competitiveness,” as the country is lagging behind other Nordic countries in their professional use of AI, according to a report by Danish think tank Mandeg Morgan.
But it is also part of a larger series of investments announced in several European countries for Microsoft in recent years, including the United Kingdom, Germany, France, and Italy, where they are building AI-related infrastructure.
Each time, these investments have been among Microsoft’s largest to date in the respective countries.
Last month, in France, Microsoft announced an investment of 4 billion euros in AI and cloud infrastructure, training, and French Tech acceleration, aiming to train up to 1 million people and support 2,500 AI startups by 2027.
Data centers consume France’s annual energy needs
But in the race for artificial intelligence, as countries attract Microsoft to bring its dollars in, the company takes the opportunity to look beyond data and employment opportunities.
The energy requirement to support these large infrastructures is currently a major challenge for the data center industry.
According to data from 451 Research, cities like Singapore, London, Dublin and Amsterdam have already begun imposing restrictions on data center construction due to energy concerns.
In March, the European Commission began establishing a new European Union-wide scheme for rating the sustainability of data centers as part of its wider commitment to reducing energy consumption by 11.7% by 2030.
Artificial intelligence relies heavily on extensive data processing, necessitating large servers that must be operational 24⁄7. These servers consume energy and require continuous cooling to prevent overheating.
In 2022, the International Energy Agency reported that data centers consumed 460TWh, equivalent to France’s annual energy consumption. In the worst-case scenario, this figure could rise to more than 1,000TWh by 2026.
“When we look at where to invest we look at two things: one is people and the other is energy,” said Smith at a press conference in Sweden. In 2020, Microsoft committed to removing more carbon dioxide from the atmosphere than it emits, becoming water-positive, and having zero waste by 2030.
“What we are doing here is committing ourselves to run these data centers with the world’s best water conservation and the broadest commitment to the use of green energy,” added Smith referring to Sweden’s hydroelectric and wind power capacities, but also nuclear power.
By highlighting this, the president of Microsoft acknowledges the Swedish government’s latest developments regarding nuclear power, a carbon-free but non-renewable energy source.
The allure of Sweden’s green policies
“The kind of policies that you have brought to Sweden are giving us confidence to make these large investments,” said Smith in support of the leader of the Moderate Party who took office as prime minister in October 2022. Garnering only 19% of the vote, he began his term in office with a popularity rating significantly lower than his predecessor.
But despite his weak mandate, the prime minister has indeed committed to a “restarted focus on clean energy.” In November 2023, the government introduced legislative amendments that will allow for new nuclear reactors to be constructed in new locations, and more than ten reactors to be operational at once. The amendments came into force in January 2024.
In January, Kristersson also signed a renewed strategic innovation partnership between Sweden and France with President Emmanuel Macron, including new areas such as nuclear energy. And at COP28 in Dubai, Sweden joined several international initiatives to speed up the climate transition, notably including a declaration to triple the global capacity of nuclear energy.
A quest for partnerships
As Microsoft continues its investment spree in Europe and beyond, it is also seeking partnerships in energy supply.
For more than 30 years, Microsoft has collaborated with Schneider Electric in the energy sector in Europe. In 2019, they launched the AI for Green Energy program aimed at enhancing energy efficiency within the AI industry.
Most notably, the company signed a deal with Brookfield Asset Management to invest more than 10 billion dollars to develop over 10.5 gigawatts of renewable energy capacity for the United States and Europe, the largest corporate clean deal in history. The deal aims to contribute to the “two companies’ shared goals to decarbonize global energy supplies and reduce carbon emissions.”
In its search for partners, Microsoft formed a partnership in 2020 in Sweden by the state-owned energy provider Vattenfall to deliver renewable energy 24⁄7 to its data centers.
But when asked whether the company would invest in Swedish nuclear power, Mr Smith was hesitant to reveal its intentions, saying that “we’re not making any announcement about that today.”
And although Mr. Smith stressed Microsoft’s interest in the wind power that Sweden offers, he admitted that “globally, the next generation of nuclear power will likely be important” in small modular reactors that can be built alongside data centers rather than the kind of nuclear plants that exist today.
