At the end of last week, the Ministry of Energy announced its plan to attract investors for data centers by offering them cheap and secure energy through Kozluduy Nuclear Power Plant (NPP). Just days later, the European Commission announced it would invest 200 billion euro in AI, including for its physical infrastructure. If even a drop of that were to come Bulgaria's way it would feel like a veritable tsunami in the face of the drying up and withdrawal of international investors.
There are, however, concerns over such a project. Data centers that are used for AI technology are a massive drain on energy. In addition, Bulgaria's aging energy infrastructure and market pose the question: would we be ready to accommodate such an investment?
Unfortunately, recent history does not favor Sofia. Over the past few years, Bulgaria has been on the losing side when it comes to big investments from tech giants such as Microsoft, Google etc. who have chosen most often to set up shop in Greece. And big money usually follows big money in which case it would be hard to expect that any investment could be diverted from our Hellenic neighbor.
And yet hope remains. Apart from this being an incredible opportunity if an investment can be made for AI data centers in the country, the process itself presents a great learning possibility for the ecosystem itself.
To Data or no Data
Storage of information has been the go-to bread and butter of data centers for some time. They are the cloud where all documents, music, and games etc. are stored. The emergence of AI technology in its current form forced this segment to evolve to where they are now needed for computational actions by the new technology. This, in turn, causes large new investments in computational power. Concurrently, there are 28 such locations within Bulgaria of which the newest one belongs to Equinix in Sofia.
These new AI data centers, while much larger than traditional ones and with considerably more complicated hardware, do not differ much from each other. "Investments of this magnitude can only be carried out by no more than 12 or 13 companies globally that include Nvidia, Oracle, and other massive tech giants", comments Dobroslav Dimitrov, chair of the Bulgarian Employers Association of Innovative Technologies.
He believes Bulgaria lost out on a big opportunity to construct conventional data centers in the last decade, which makes the task of attracting investments of the new type much harder. "Our country's leadership missed the chance to take part in the data center boom before. Greece, on the other hand, negotiated directly with investors like Google and Microsoft and, as a result, convinced them to locate within their country. These two centers, however, are a drop in the ocean when compared to what is being talked about at the moment - not just data centers, but computational ones; they are factories of the future. It is not fatal that we as a country slept through the previous phase, but it's vital to learn the lessons," Dimitrov elaborates.
He says that Bulgaria has three key assets that make it a lucrative investment location. Firstly - cheap energy produced by the NPP. And when you consider that just to function a modern AI data center requires upwards of 1 GW of energy then access to a constant source of energy that is not dependent on external factors is a big plus. Secondly, Bulgaria is well-placed geographically between Europe and Asia while being close to critical internet infrastructure and enjoying relatively low seismic activity. Thirdly, it is a location with low amplitudes in temperature.
Can we do it? Yes, we can!
"Bulgaria has the capacity for such a center. Romania announced last year two projects with combined power of 45 MW worth 500 mln. euro, along with the expansion of existing infrastructure for other data centers. Serbia and Croatia are also expanding their energy capacities for data centers with 5 MW of power. We also have a couple of projects here, but far smaller in scale and mainly for personal use. Our "big" data centers have a capacity of 2-4 MW, which is not at all grand, but it reflects the needs of our market", Ivaylo Mitin, data center manager for A1 Bulgaria, told Capital Weekly.
Where could such a massive building and its underlying infrastructure be housed? An option being offered by the Ministry of Energy is for it to be erected near the atomic power plant in Kozluduy. Another option, suggested by Dobroslav Dimitrov, is Burgas, where average temperatures are lower and where there is also an existing energy infrastructure due to the Lukoil refinery. Another bonus is that it is an intercrossing section for the fiberoptic cables between Europe and Asia.
Another key point for the construction of an AI factory, which such a data center is in essence, will be the enormous amount needed for maintenance. "The location being close to the atomic power plant sounds great, but there will be a lot of challenges in servicing and maintenance. At the moment most, if not all of the companies, are concentrated around Sofia, which in turn would make any response to Kozluduy slower and costly", comments Mitin.
Obstacles on the way
Bulgaria's potential notwithstanding, the country is also, in some ways, its own worst enemy. Firstly, because it has a longstanding reputation for corruption, exacerbated by the recent political instability. Secondly, because the country overestimates the capacity and level of its technological specialists - something that has been raised by the tech giants themselves (Google, Meta etc.).
Now Bulgaria will face an additional hurdle of extremely high competition. Given the cost of this type of AI factory, only a few countries in Europe will acquire them. During the high-level AI event in Paris, organized by Emmanuel Macron, European Commission President Ursula von der Leyen announced the launch of the InvestAI initiative, which envisages 200 billion euro in investments in AI and a fund of 20 billion USD specifically aimed at building AI factories, or gigafactories, as the Commission prefers to call them.
Competition for this financing will be fierce because it will, inevitably, lift some of the capital-intensive burden off companies' shoulders. Among other things, if the plan comes to fruition, Europe will have gone some way to counter criticism that it has been trailing in the AI race. The question is whether Bulgaria will also be part of this catch-up.
In this case, the country should rely on its strengths. Even if such an investment does not ensue, the negotiations themselves would be beneficial to the state and its reputation. According to Dimitrov, the key is the state's ambition to enter into such negotiations and seriously seek an investment of such a scale. "If, a few years ago, we couldn't do it, now we have the chance to make it happen. For it to happen, unity is needed, including between the government and the president. This is an investment in the critical infrastructure of the future and we must have the confidence to attract it," he adds.
At the end of last week, the Ministry of Energy announced its plan to attract investors for data centers by offering them cheap and secure energy through Kozluduy Nuclear Power Plant (NPP). Just days later, the European Commission announced it would invest 200 billion euro in AI, including for its physical infrastructure. If even a drop of that were to come Bulgaria's way it would feel like a veritable tsunami in the face of the drying up and withdrawal of international investors.
There are, however, concerns over such a project. Data centers that are used for AI technology are a massive drain on energy. In addition, Bulgaria's aging energy infrastructure and market pose the question: would we be ready to accommodate such an investment?
