This article first appeared on GuruFocus.

Alphabet (GOOGL, Financials) moved ahead with plans to build a data hub on Australia’s remote Christmas Island, a project the company said would improve regional connectivity through new subsea cables across the Indian Ocean. The announcement follows concerns from residents and businesses over whether the island’s small power grid could meet demand from both Google and the phosphate mine that employs about half the population.

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Phosphate Resources CEO Nicholas Gan said existing diesel-powered generation capacity is sufficient to support Google’s requirements and those of local users. He noted, however, that the grid could face constraints if a dormant resort or a former detention center were reopened. He added that Google’s arrival strengthens the economic argument for a transition to renewable energy, which would reduce reliance on imported diesel.

Australia’s infrastructure department is in discussions with Google to ensure energy needs are met without affecting residents or businesses. Google said the data hub will be smaller than its major global data centers and will provide digital infrastructure that can also be used locally. The company said it is exploring ways to use its power demand to help accelerate investment in sustainable energy on the island.

The project is part of a broader subsea network, with additional planned cables running eastward toward key Australian military areas. Analysts say the island’s location could support future technological and security applications, including AI-enabled monitoring systems.