Chapter 1: What is the main topic discussed in this episode?
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Welcome to Tech News Briefing. It's Friday, February 20th. I'm Patrick Coffey for The Wall Street Journal. The AI revolution is no longer just a software race, and hyperscalers are hurrying to put the right infrastructure in place. Data centers are a booming business, and their rapid expansion is being felt across industries. On today's show, we're taking a look at two.
First, in the battle for AI dominance, every engine of the economy is getting recruited into the fight, and that includes literal ones made for jets. We're unpacking how it all works. Then, in some regions of the country, big tech is buying up a lot of land to build data centers, and homeowners aren't happy. We're diving into how these new developments are unfolding and where they might go next.
But first, tech giants and their developer partners are rushing to set up these massive data centers as fast as they can. And that translates into an unprecedented demand for energy. One of the most effective and convenient sources on hand turns out to be jet engines, which can be converted into turbines powered by natural gas.
The journal's Jinju Lee covers the energy sector for our herd on the street column, and she's here to tell us more about what is quickly becoming its own little-known but very profitable AI-adjacent industry. Jinju, how exactly do jet engines help power these AI data centers?
Yeah. So just to step back a little bit, there are these heavy duty, really efficient, large turbines out there. But there's such a big backlog for those. We're seeing that jet engines can be converted into natural gas fired power turbines. And in fact, a lot of major power equipment manufacturers make what are called aeroderivative turbines, which are modeled after these very jet engines.
What we're seeing now, though, are companies converting jet engines into aeroderivative turbines because the demand is that high.
So then we have some that are refurbished that were actually used in jet engines and some that are designed specifically for this purpose. Exactly. And I'm trying to imagine how that looks like just sort of like rows and rows of jet engines, essentially just kind of churning.
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Chapter 2: What is driving the rapid expansion of data centers?
So they're only available when it's sunny or windy. Natural gas is sort of the base load. It can be always on as long as there is fuel available. So these jet engines turned aeroderivative turbines are filling a need that the existing natural gas power equipment cannot fill. And how do we convert a jet engine into a turbine? So one of the companies that's doing this, they're called FTAI Aviation.
They mentioned that the design process itself took about a year and a half, but the conversion process itself is pretty quick. It's 30 to 45 days. And the two main things that need to happen are the fuel nozzle has to change so that it goes from using jet fuel to natural gas. And then the second change is switching out the fan in the front of the engine from a very large fan to a smaller one.
You also reported that there's a shortage in the jet engine market.
Yeah. Why is that? It was one of those pandemic disruptions where after the pandemic, the demand for flying in general recovered faster than the industry anticipated. So there was a pullback in jet engine manufacturing, and that wasn't able to accommodate the snapback in demand.
And that seems like it could possibly create some tension in the market, given that the anticipated growth in data centers is not slowing down anytime soon, right?
Yeah. So if even more jet engine parts go into making power turbines than serving the aviation industry, then that could worsen the supply shortage in the jet engine market.
Right. I mean, there's this demand for engines outside of their normal use. It's kind of created this entire secondary market.
Yeah, it's not just jet engines. There's manufacturers of other types of power equipment that are now refocusing their efforts. It's very interesting how we're seeing all kinds of manufacturing capacity sort of repurpose and become creative in the face of this skyrocketing demand from data centers.
That was WSJ Heard on the Street columnist Jinju Lee. What do you think about the AI data center boom? If you're a listener on Spotify, leave us a comment with your thoughts. Coming up, how would you like to be lulled to sleep every night by the low ambient hum of an AI server farm? That's becoming a reality for more and more people in certain parts of the US.
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Chapter 3: How are jet engines being repurposed to power data centers?
I mean, if you look at existing data centers, they're like 99% occupied. So the signal that sends to the market is that we should build more of them because we can fill them with Google or Microsoft or other tech tenants. How long that continues to happen is unclear.
And of course, there's a lot of political pushback to their development now and a lot of laws that are changing, but the demand is still there.
And this is a very broad question. How do homeowners feel about these data center projects cropping up near where they live?
I think it depends on the scale. I think an area that has a couple of data centers that are a couple of miles away, most people don't care that much. Some people certainly do. It's when an area becomes like a magnet for data centers and there's several of them, dozens of them, and they're encroaching really closely on their subdivision or where they live that you see people more upset about it.
It's very different than suburban sprawl where you have retail. People may not love it, but it's useful. You have an interaction with it. You go to a store that you might have something that you actually want to buy there. You don't interact with the data center. You don't get any use for it. You don't go shopping there on Saturday.
Do we have residents protesting this at all?
Yeah, big time. I mean, there's very organized groups of activists in many of these places that are the ones showing up to planning commission meetings and local government meetings of all kinds, sometimes filing lawsuits to try to block protests.
rezoning for data centers there's elected officials i would say increasingly so in places like virginia that have been voted in at least in part based on on the concerns of people who are opposed to the data center construction so it's a very visible contingent of people that are opposed to a lot of this construction
That was WSJ reporter Will Parker. And that's it for Tech News Briefing. If you're a listener on Spotify, be sure to leave us a comment. Today's show was produced by Julie Chang. I'm your host, Patrick Coffey. Jessica Fenton and Michael LaValle wrote our theme music. Our supervising producer is Katie Ferguson. Our development producer is Aisha Al-Muslim. Chris Zinsley is the deputy editor.
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