WASHINGTON — Clusters of small data centers that require only 5 to 20 MW of power are the future of the AI boom, a veteran data center builder told Data Center World this week.
Pete Sacco, founder and CEO of PTS Data Center Solutions, on Tuesday gave several reasons why he believes the days of giant data centers are coming to an end. Developers are canceling projects because of interconnection waits of up to five years and community pushback, he said.
Just as important, he said, is that data centers are shifting to inference work (responding to requests) and away from training, which means new facilities must be located where users are.
A distant data center can take as little as 10 milliseconds to answer a query, too much time for inference computing, he said. A delay of this magnitude is fine when the data center is focused on training large language models, but when the data center is focused on inference (answering queries), a millisecond delay is closer to what is expected, and this requires the data center to be physically close to where the queries are coming from.
“You can’t have 500 MW data centers in the New Mexican desert and be able to provide real-time inference on a millisecond scale,” said Sacco, whose company has focused much of its business on building data centers for federal agencies.
Inference is expected to outperform training as the dominant use of data centers for the first time next year, when it will exceed 55% of all IT demand for AI, he said. “This requires a different infrastructure model.”
Sacco launched a company, Gray Wolf Data Centers, to lay the groundwork for what it says will be a new model of data centers. Instead of the current model, in which hyperscalers and other large organizations own large data centers, computing will occur in clusters of small data centers owned by independent operators, he said. Each will interact with the others to create a distributed computing system.
“Instead of having one 1,200 MW data center, for which there are no more sites, I can build 120 10 MW data centers in one region. [and] stick them all,” he said. “The idea is to be the Starbucks of the data center industry. Some of them will be owned by the company. Most will be franchise owned. Some will be standalone, but all will work as a [distributed autonomous organization]and they will all work with the same cloud approach.”
A distributed autonomous organization has decision making, management and ownership of the distributed, non-hierarchical entity. DAOs often use blockchain for transparency in the organization’s votes and actions, according to Investopedia.
In this decentralized data center model, each data center will build its own power source based on what makes sense for the area, according to Sacco.
They will be powered by a grid interconnection or microgrid that could be powered by solar batteries and behind the meter, he said. There will also “probably be a proliferation of hydrogen” used to generate electricity that will eventually be replaced by small nuclear reactors, he said. “Small nuclear weapons are probably eight years away: five years of development and three years of certification.” In the long term, Sacco hopes nuclear fusion will power data centers.
Regardless of the source of electricity generation, “the days of centralized service are over,” he said.
Gray Wolf is building its first data center based on the new model in Connecticut as a proof of concept, Sacco said. There are few data centers in the state because of its high energy cost, but it is in the heart of the U.S. Northeast Corridor, where much of the inference demand is located.
“Connecticut … has a food problem,” he said. “Thirty cents per kilowatt-hour? Who would build a data center for 30 cents per kWh?”
Sacco is building a plant on the site that will convert carbon-based waste, including tires, food and medical waste, into energy. In addition to powering the initial data center and others being built in the area, excess power can be sold, he said.
“Essentially, I can produce electricity at less than 10 cents a kWh. I can compete with the utilities … I can sell it to a manufacturer. I can sell it for 20 cents a kWh and I feel like a hero because it normally costs 29 cents a kWh.”
In the year 2025, the average residential cost of electricity in the US it was 17.3 cents per kWh, according to the US Energy Information Administration.
About 2,000 people attend Data Center World this week.
Editor’s Note: Data Center World is hosted by Informa, the parent company of Informa TechTarget, of which Facilities Dive is a part. Facilities Dive makes editorial decisions independently of Informa.
