While global data centre investors and operators are confident in the sector’s future, nearly all (98%) are concerned about the availability and reliability of power supplies vital to data centres.

This has been revealed in a new study from DLA Piper which surveyed 176 senior executives in the data centre industry during the third quarter of 2024.

The report found that though 70% of respondents predict increased investment in data centres in the next two years, with almost all foreseeing AI driving demand for data centres, primarily through machine learning and natural language processing.

This increased demand, however, is putting pressure on power supplies, with half of respondents identifying unreliable power sources and their availability as a principle barrier to investing in data centres.

The global data centre sector is expected to be valued at around $300bn in 2024, according to TMT Finance. With an average compound annual growth rate of approximately 10% over the next five years, the market is expected to reach $483.15bn by 2029.

However, despite its continued growth, infrastructure may be holding it back.

The report found that utility companies in the US are being flooded with power delivery requests for sites earmarked for data centres that they will not be able to satisfy until well into the 2030s.

In response, utility companies are reportedly requiring large upfront, non-refundable payments from investors in land and a committed off-taker of that power. Utility companies are also requiring developers to pay up front on all critical infrastructure, such as substations, required to bring power to the site.

Further, investors are also expecting sustainability concerns around data centre energy and water usage to continue growing with 70% of respondents saying they expect scrutiny and due diligence to increase over the next two years.

The EU has already introduced a range of measures which place significant obligations on data centre operators to report and take measures to reduce their emissions.

“Data centre capacity is key to the AI revolution and the wider global economy,” Anthony Day, partner at DLA Piper said

Recommended reading

• IBM: 85% of Firms Are Falling Behind in the AI Arms Race
• How Badly Will AI Data Centres Be Impacted By Power Shortages?
• UK Gov: Data Centres Are Now Critical National Infrastructure

“To satisfy increasing demands for processing power, not only will significant investment be required from across the industry, but also a clear framework established to encourage coordination between policymakers, investors and power providers, that ensures the heightened future power demands can be met.

“It should be possible to fulfil industry needs and realise AI’s potential, however the need for sufficient and reliable power supplies to be in place must be a global priority.”

Alanna Hasek, partner at DLA Piper added: “The energy transition has led to an unprecedented increase in demand for grid access with data centres competing with the likes of renewable energy projects and electric car charging stations. Faced with demands from governments to prioritise the transition, already overstretched utility companies in the US are increasingly requiring data centre investors to fund their own grid connections. Investors and developers should be prepared to see this trend begin to be replicated across other markets.”