Shortly after each other, two plans for "AI factories" came in late June: one in Groningen and a "gigafactory" around Rotterdam. What do these plans entail? And how realistic are they? Eight questions and answers about these AI data centers.
Click on the question to read the answer.
What is the Groningen plan?
The government wants build an AI factory and "innovation hub" in the old Niemeyer tobacco factory in Groningen. The €200 million project will mainly serve to research and train new AI models for defense, industry and healthcare, for example.
What is the "giga-factory" plan?
Data center entrepreneur Han de Groot has assembled a coalition of companies and knowledge institutions for an "AI gigafactory" near Rotterdam. The EU wants to build up to five such gigafactories, partly with European money. De Groot estimates on his LinkedIn page the cost at roughly 5 billion euros. This 'factory' should train new AI models, but above all be available for companies to apply AI in practice.
What are the biggest differences
The Groningen plan is much smaller (200 million euros) than the gigafactory plan (5 billion euros).
The Groningen plan comes mainly from governments, the gigafactory from business.
The Groningen plant serves more for research, the gigafactory for execution.
Why are AI factories needed in the first place?
Artificial intelligence (AI) is getting smarter and smarter. Although there is debate about exactly how smart it is and what tasks it can all perform in the future, its use in practice is already growing hand over fist. According to Sam Altman of OpenAI, 10% of the world's population is already using their service ChatGPT.
The more computing power you have at your disposal as a country and company, the better you can compete. Some AI applications are best left to data centers in, say, America, but for confidential or lightning-fast services (think banking data and industrial robots), data centers close by are very important. Moreover, there is a perception in Europe that people are overly dependent on American tech giants and want to become more independent.
Didn't the Netherlands want fewer data centers? Does this even fit?
True. In 2022, Minister Hugo de Jonge decided to ban new large data centers in the Netherlands in principle, except in northeastern Groningen and a piece of North Holland where there is already a large data center. This happened partly after discussion about a plan by Facebook to build a giant data center in Zeewolde, which ultimately did not go ahead.
According to De Jonge, the Netherlands was too small, and the power grid too full, to allow more large data centers. A large data center was defined as more than 10 acres and an electricity connection of more than 70 megawatts. Although it is unclear how large a "gigafactory" will be, it is likely over. That would mean the central government would have to grant an exemption for this data center.
Can the power grid handle this?
Exactly how much power they would use is not known. The Groningen AI plant is smaller and will be in an old factory building where much needed infrastructure is probably already in place. Basically, there is no more room in the city of Groningen for additional power users, but it sits near areas where there is still room. Eemshaven in northeastern Groningen is also an important power generation point.
The gigafactory to be built around Rotterdam is a lot bigger. The president of the Danish data center association estimates that an EU gigafactory will use about 1 to 1.3 terrawatt hours (TWh) of power. In the Netherlands, all data centers together consumed 3.7 TWh of power in 2021. So this would be a substantial increase. But because the Rotterdam region also generates a lot of power (gas, coal and wind), it is, along with the northeastern Netherlands, one of the few places in the Netherlands where there is still space is on the power grid.
Is the Netherlands leading the way with this?
Yes and no. The Groningen plan falls within an EU scheme within which at least 15 AI plants have already been built, or are under construction. There are more EU countries with than without such an AI factory. But of the gigafactory, there should be a maximum of 5 in the EU. If the Netherlands would succeed in obtaining the EU subsidy for this, it would be among the frontrunners.
However, it remains difficult for the EU to unlock as much investment in AI data centers as in America, where tech giants are investing tens of billions.
How certain is it that these AI factories are coming?
Both projects stand or fall with EU funding. The EU has released a total of 20 billion euros for AI investments. If there is no European money, the Dutch plans will not go ahead.
For the Groningen project, it will be known in September whether or not there will be European money. If there is, the financing is already complete: the rest will be paid by various Dutch governments.
The EU will decide by the end of this year where the gigafactories will be located. 76 proposals have been submitted and up to 5 of them will be honored. So the Dutch proposal has a lot of competition. Moreover, if the subsidy is forthcoming, the consortium must still be able to scrape together a few billion euros, obtain the necessary, scarce AI chips. AND the central government must therefore be sweet-talked into getting an exemption from Hugo de Jonges ban on new large data centers.