Global data centre investors and operators are confident about the sector’s future, with 70% of respondents predicting increased investment in data centres in the next two years, new research by DLA Piper has found. Almost all respondents also foresee AI driving demand for data centres, primarily through machine learning and natural language processing.
Those surveyed have also expressed significant concern over the stability of power supplies for the rapidly-growing number of data centre sites worldwide. A total of 98% of investors and operators told the global law firm that they had concerns about the availability and reliability of power supplies when they made decisions about data centre projects, with half of respondents identifying the issue as a principal barrier to investment.
The global data centre market is expected to be valued at around USD 300bn in 2024, according to TMT Finance analysis, which carried out the research for DLA Piper. With a projected average compound annual growth rate (CAGR) of approximately 10% over the next five years, the market is expected to be valued at USD 483.15bn by 2029.
DLA Piper highlights 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 now requiring large upfront non-refundable payments from investors in land and a committed off-taker of that power.
The report also reveals utility companies are requiring developers to pay upfront for all the critical infrastructure, such as substations, needed to bring power to the site. Investors are also expecting sustainability concerns around data centre energy and water usage to continue to grow, with 70% of respondents saying they expected 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, including the European Climate Law and its Energy Efficiency Directive.
William Marshall, Energy Partner in DLA Piper Ireland commented: “Data centre capacity is central to the AI revolution and thus the global economy in the coming decades. It will take significant investment across the industry, and coordination between policymakers, investors and grid operators, to ensure that power supplies can meet the demand from industry and investors. In Ireland, large scale new investment in data centres have led to concerns and policy responses and although Ireland is far from alone in security of supply and decarbonisation concerns, digital infrastructure and tech are substantial high value sectors for the Irish economy. Consequently, it is hoped that following the current Commission for Regulation of Utilities (CRU) policy review, a clear and achievable path for connection of new data centres will be available”
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