Saudi Arabia’s development megaproject NEOM and Riyadh-based sustainable data center developer DataVolt announced that they have signed a new agreement, aimed at establishing a “net-zero AI factory campus in NEOM’s Oxagon region.

The agreement includes plans for $5 billion of investment in its first phase, establishing a 1.5 GW factory integrating a wide range of computing densities and energy efficient architectures, anticipated to be operational by 2028.

The new agreement comes as the rapid growth of AI threatens to challenge global carbon emissions reduction efforts, with the IEA estimating that AI-driven data center power usage could double by 2026 and expand rapidly over the next several years. Several tech giants, including Microsoft, Google and Amazon, have highlighted increased energy needs to meet the AI-driven growth in data centers as a key challenge to their decarbonization goals.

Under the agreement, DataVolt will lease land for the development of the facility from Oxagon, who will also provide infrastructure support. The new facility will be designed to operate at net zero, with the ambition of being powered entirely by renewable energy, and utilizing advanced cooling technologies.

Rajit Nanda, CEO of DataVolt, said:

“This agreement with NEOM and Oxagon underscores our unwavering commitment to support the Kingdom’s vision of becoming a regional digital and AI hub. The Kingdom’s strategic location, coupled with its abundant green energy resources, aligns perfectly with DataVolt’s mission in providing state-of-the-art sustainable data centers.”

According to NEOM, Oxagon’s location on the Red Sea coast will provide access to sub-sea cables providing fiber connectivity, in addition to cost-competitive renewable energy and green hydrogen, making it “the ideal location” for the development of “a large-scale green AI factory.”

Vishal Wanchoo, CEO of Oxagon, said:

“The agreement with DataVolt highlights the potential impact of the sustainable infrastructure Oxagon offers its tenants and sets the foundations for the first green-AI workload to come on-stream in KSA along with the necessary computing power for regional and global impact.”