Data Center Frontier opens our podcast interview catching up with CyrusOne CEO Eric Schwartz by discussing the company's recent $12 billion in announced financing, highlighted by a new $8 billion warehouse facility in the U.S. to support growth driven by demand from hyperscalers and AI technologies.
In the course of the discussion, Schwartz notes CyrusOne's strong growth trajectory and expansion plans in Europe and Japan, while emphasizing the organization's principles of earning customers' trust and a commitment to operational excellence.
We also receive an update on the progress of the company's Intelliscale offering for build-to-suit AI data centers.
Additionally, the talk covers CyrusOne's 2024 sustainability report, focusing on the company's carbon neutrality efforts, renewable energy investments, and the overall industry's commitment to reducing carbon footprints.
Here's a timeline of the podcast's key moments:
0:41 - The interview opens by highlighting the significance of CyrusOne's recent total announced financing of approximately $12 billion.
Regarding the company's securing a $8 billion warehouse facility for future growth of U.S. projects, Schwartz notes:
"We've been very active at CyrusOne in the capital markets. Part of that is driven by the growing base of assets that we have in operation with customers and securing long term financing for those. More recently, we announced a very large warehouse facility here in the US to finance our future growth projects that are starting construction or under construction. What's important about the warehouse facility is its scale: Nearly $8 billion is a substantial amount of capital, but really necessary and appropriate to the volumes of development that we have underway and are projecting over the coming months."
3:34 - DCF notes how the AI boom has been driving a tidal wave of data center investment, and asks for opinions on whether this level of investment is sustainable, in light of comments such as those from Goldman Sachs' analyst recently seen deflating some of the anticipation for AI.
4:42 - In the course of his response, Schwartz says:
"I do expect the volumes of capital investment to continue, but it's driven by the demand from end customers, and the end customer demand in many cases is tied to the development and deployment of AI. I think we're still early in the adoption and exploitation of AI technology across a whole range of business applications, and I think the critical element is that the investment follows the demand, and our direct demand is from hyperscalers and enterprises who are deploying AI. Also, recent earnings reports from the various hyperscalers showed continued strong growth in cloud as well."
7:12 - DCF asks for an update on the progress of CyrusOne's Intelliscale data center platform, able to support rack densities up to 300 kW, in North American deployments.
Schwartz reports:
"I've been very encouraged and pleased with the progress that we're making on Intelliscale. We have our first Intelliscale projects under construction now, and we have more slated to come out of the ground here shortly. They are spread around the United States in the major markets where CyrusOne has presence. I think in much the same way that cloud infrastructure gets distributed in various parts of the country, the same is the case with artificial intelligence, subject to the constraints that we face on getting access to power. But we're making progress on that issue in a number of different locations around the US."
CyrusOne's CEO added:
"Customer response to Intelliscale has been very positive; in particular, what customers' value is. They see a pre-engineered and pre-coordinated schematic and design scheme that we can construct and deliver in relatively short order, that has the flexibility to deal with varying rack densities, with a certain combination of liquid cooling and air cooling, because not all equipment is going to be liquid cooled straight away. Intelliscale also incorporates an integrated operating methodology and scheme for dealing with these higher densities, so that the processes and the know-how of what it takes to operate a site like this goes into it, as well as just the design and the technical specifications."
11:01 - Schwartz outlines CyrusOne's strong growth trajectory due to AI, cloud, and partnerships, mentioning new leadership appointments and expansion opportunities in Europe and Japan, while stressing the importance of customer trust and operational excellence.
14:28 - DCF introduces the topic of CyrusOne's 2024 Sustainability Report. Schwartz discusses the company's substantial investment in producing the report, highlighting its progress toward carbon neutrality and efforts to reduce water consumption.
17:39 - Talk turns to the recent uptick in nuclear and hydrogen power developments for data centers. Schwartz provides insights on renewable energy investments, the exploration of alternative energy sources, and the importance of integrating data centers with the power grid.
18:24 - Schwartz admits:
"I'm personally very interested and optimistic about the progress that's being made ... but at the same time, I would say that my realism filter says that it's going to be probably years before we see commercial scale deployments of small modular reactors for nuclear. And I know there are pilot projects underway with hydrogen, but that equally is in an early stage, and it's going to be years, I think, before we see things at scale here in the US, and candidly in Europe as well. But it's necessary to continue to invest and test the technologies, to develop the learning curve to make those commercially viable and adaptable, and I'm an optimist in general. I think it's just a degree of patience required for how long it'll take to be broadly deployed in circumstances that make sense."
24:50 - Schwartz reiterates the importance of the data center industry's focus on reducing carbon footprints, focused on collaboration with experts and financial incentives for finding efficient solutions.
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