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Do we need a new approach to infrastructure to answer to the challenges facing the data centre industry? In the first of a two part series looking at the future of data centre infrastructure, we talk to º£½ÇÊÓƵ subject experts on both sides of the Atlantic about this rapidly evolving sector

As the digital economy surges forward, hyperscale data centres – vast facilities housing thousands of servers – have become the backbone of everything from cloud computing to AI. Yet, their exponential growth poses a pressing question: how can we make these energy-hungry giants sustainable, particularly in those countries that are grappling with their own energy transitions?

Data centre developers and operators fall into four key typologies – enterprise, colocation, edge and hyperscale. But it’s the latter – dominated by the tech industry’s big hitters, the likes of Microsoft, Amazon, Google or Meta, where the energy demands of facilities become extreme.

The challenge is twofold. First, there’s the sheer scale of energy demand. A single hyperscale facility can consume as much electricity as tens of thousands of homes and sometimes even whole cities. Second, there’s the issue of where that energy comes from. While many countries have made significant strides in decarbonising their grids – thanks to offshore wind, solar, and nuclear – data centres often require consistent, high-quality power that intermittent renewables alone can’t always guarantee. This tension between digital growth and environmental responsibility is driving innovation in energy generation and procurement. Operators are exploring on-site renewables, private wire agreements, and even small modular nuclear reactors (SMRs). But the path to truly sustainable hyperscale infrastructure is far from straightforward.

Chris Glover, director for utilities and energy in º£½ÇÊÓƵ, explains: “I was speaking to a client recently who was interested to explore what’s involved with powering a 1GW data centre, because that’s what some of these data centres are now up to. To put that into perspective, we’ve heard a lot in the news lately around the UK Government trumpeting the development of the Sizewell C power station. That’s a 10-year project. But Sizewell C offers 3GW. So that’s just three data centres at this sort of scale.

“That’s the energy issue with these kinds of data centres,’ he adds. ‘It’s why we’re seeing Microsoft asking for Three Mile Island to be reinstated from its moth-balled state – purely so they can power a data centre there[1]. Meta did a deal in Pennsylvania and Illinois[2] buying the output for a power station to power one of their data centres[3]. That’s the scale of these things. It really can take a power station.”

Sometimes, that is literally the case. Glover says: “The UK Government has announced an initiative to fund AI growth zones, and º£½ÇÊÓƵ is working on one of those projects in the Midlands, which is looking at repurposing a former coal-fired power station into a data centre – because being a power station, it already has a large-scale connection to the electricity grid.” 

Power struggle

Such innovative approaches are not just happening in the UK. Across the Atlantic, our US teams are also working with governments, utilities and tech companies to try to understand how they can innovate around the challenges they face.

Jason Masters, associate principal and US Energy Leader at º£½ÇÊÓƵ, says: “Private equity in the US realised, five or six years ago, that the hold-up for all our data infrastructure is access to the grid. So, they have been going around and buying up old power plants, knowing that they would provide access to the grid, because the queue to get electrical access to the grid is now two to four years. If you own an asset that helps shorten that, the private equity firms realised you might as well hold on to that asset, because all it’s going to do is appreciate in value, until such a time as a tech giant has to come along and either partner with your or buy it out from under you.”

The infrastructure landscape is undergoing two transformative changes: the widespread shift towards electric heating and driving and the explosive expansion of artificial intelligence (AI) and cloud computing. Electrifying heat systems and driving is a crucial step in cutting down dependence on fossil fuels, while the rise of AI and cloud services is revolutionising how people interact, collaborate, and access information in daily life.

“Searching for something using AI uses at least seven times the electricity used by simply Googling the same thing,” Glover says, referencing the latest research published by MIT Technology Review[4]. “At the moment the UK government estimates roughly 60GW peak demand for the UK. That’s projected to double to 120GW by 2050. But the rise of AI could just blow that figure out of the water.”

Masters adds: “The levelised cost of geothermal energy is already below the lowest cost of nuclear. The problem is that those costs are in areas where hot geothermal for baseload power is close to the surface. But the Air Force is already tackling that question at a project in Hanscom Air Force Base in Massachusetts. They are building baseload geothermal power for their site in an area not well known for its geothermal potential. There are other geothermal technologies from companies like Fervo, FORGE, and Ormat that are already being optimised for commercial deployment in Utah and Nevada.

“The reality is that cost is going to be the driving factor,’ he adds. ‘Being able to site power as close to its consumption in a stable form-factor at the cheapest price is what will drive the winners in this energy transition, including for these AI data centres. As another energy analyst pointed out, it’s electro-tech that’s going to be the driver of our energy transition. What that technology mix turns out to be, it will have to win based on cost and stability.”

So why would a nation want to accommodate hyperscale data centres at this time of energy increases? Apart from the economic boost of having the tech giants investing in a country’s facilities and the digital resiliency created by having data retained within the country, there is potentially an enormous secondary benefit, which could neatly answer – at least partly – the conundrums posed by their energy demands. Data centres produce one major waste by-product – heat.

Winning hearts and minds

Adam Friedberg, a partner at º£½ÇÊÓƵ in New York, and public and civil sector leader, says: “Some data centre operators are already going to cities in the US that have thermal energy networks and offering free heat. From an economic point of view, the real issue for data centres is [finding] the energy, but from a social point of view – or an economic equity perspective – the uncomfortable issue is that a lot of the costs for data centre power needs is currently going to the rate payers. That’s not going to work, unless the data centre companies come up with innovative solutions that help everyone, whether that be exporting waste heat to communities or co-locating with power plants that they invest in themselves.

“Utilities companies are telling us that they have every big tech company in the world coming to them wanting to build gigawatt data centres, but we simply don’t have the power to run them. It’s a big problem. But you can make the economics work better if you co-locate power plants with data centres – putting together the major cost burden (the powerplant) with the big revenue generator. If you can export the waste heat too, that can make the economic proposition even better, because currently, it’s becoming a NIMBY [not in my back yard] issue. That’s why innovative solutions are going to be required. In more progressive places, the companies won’t be able to just shove this down the residents’ throats for very long. They’ll need to come up with some innovative ideas to make their presence an attractive proposition for communities too.”

From an economic point of view, the real issue for data centres is finding the energy.

Adam Friedberg, º£½ÇÊÓƵ

In the UK market º£½ÇÊÓƵ has already delivered heat networks which run on waste heat from different sources, such as at the Advanced Manufacturing and Innovation District Scotland (AMIDS), and we have several using data centre heat which are at the design stage.

Energy generation

Friedberg believes small modular nuclear generation could be primed for much of the data centre industry in the US.

“They’ve just got their first permit [for small modular nuclear] in Tennessee, they’re building one in Ontario,” he says. “After all, China’s already done it.”

Chris McClean, a partner at º£½ÇÊÓƵ based in Los Angeles, agrees that SMRs could work well for High Performance Computing facilities such as next generation data centres – in the 20-300MWe range. “They’re not meant to replace a full-sized power station, but they could provide a resilient readily deployable power source where conventional sources are not available,” he says.

“The scale of the alternative renewable infrastructure you would need to offset something of the same capacity would be enormous and would require storage and back-up plant to provide sufficiently consistent power. While having a nuclear reactor in your back garden may seem outlandish, if regulatory issues are resolved and the cost challenges for SMRs are overcome it could ultimately be more attractive.”

An alternative is for a tech company to invest in a stake in a large-scale nuclear power plant, in return for a sizeable percentage of its output.

“That’s exactly what Meta has done in Illinois,” Friedberg said. “There was an old nuclear power plant that required a lot of maintenance to get it back into a condition to be run. But the intervention of Meta is allowing it to be repowered. That’s an ideal approach in many ways. But it takes a lot of trust for that to work.”  

Middle East opportunities

The data centre market in the Middle East is undergoing a transformative evolution, presenting a wealth of opportunities alongside notable challenges. Driven by a surge in cloud computing, artificial intelligence (AI), and digital transformation initiatives, the region is rapidly positioning itself as a global data hub – reflecting wider strategic shifts away from hydrocarbons and towards knowledge and tech-based economies.

Countries such as the UAE, Saudi Arabia, and Qatar are leading the charge, with large-scale investments from both regional players and global hyperscalers like Amazon Web º£½ÇÊÓƵ and Google. For instance, Saudi Arabia’s Cloud Computing Special Economic Zone and NEOM’s ZeroPoint DC highlight efforts to embed hyperscale infrastructure within giga projects. Similarly, the UAE has over USD 1.6 billion in active and planned data centre projects, supported by advanced fibre networks and pro-investment regulation. The region’s data centre capacity is projected to triple, from 1GW in 2025 to 3.3GW over the next five years[5]. One of the most compelling opportunities lies in the region’s strategic geography, which enables low-latency connectivity between Europe, Asia, and Africa. This is being further enhanced by major submarine cable projects like 2Africa, which are improving global internet traffic flow and regional connectivity[6].

Additionally, the rise of AI and high-performance computing is fuelling demand for advanced infrastructure, prompting a shift towards high-density, energy-efficient data centres. In KSA, AI spending is expected to grow at ~29% CAGR through 2030, while cloud spending is projected to rise at ~23%.

Governments are also taking a proactive approach by offering regulatory incentives, fostering public-private partnerships and providing foreign investment incentives to accelerate digital infrastructure development.

However, several structural and operational challenge remain: Geopolitical risks and regional instability, which can affect investor confidence; Regulatory fragmentation, with variations in data protection, cross-border data flows, and permitting processes; infrastructure bottlenecks, including inconsistent availability of renewable energy, water for cooling, and grid resiliency – particularly outside Tier 1 cities; and talent shortages in AI and data infrastructure, which are the drivers behind cost escalation and delays.

Nurzhan Kairbayev, a º£½ÇÊÓƵ associate director based in Dubai, says despite these challenges, the opportunities for data centre growth in the region are clear.

“There is a concentration currently in the UAE on looking at the high growth sectors and data centres is one of them,” Kairbayev says. “At a strategic level there is a lot of investment into this space. It’s still early days for the industry in the region, but there is real potential. Middle East nations are used to working at the giga-scale on infrastructure projects.

“My focus is around solving complex energy challenges. We’re already thinking about where the supply could come from, the demand outlook, as well as the resource requirement in in particular water for cooling.”

Will Ryan, a senior consultant for º£½ÇÊÓƵ in the region, who is particularly focused on energy transition, agrees: “The biggest challenges will be around water. Data centres need a lot of water for cooling and this is a desert region. There will need to be increasing innovation around water reuse and recycling for the cooling systems. But those are the kinds of complex challenges that we relish at º£½ÇÊÓƵ. Alternative – water free- technologies are emerging to cool data centres such as liquid immersion cooling whereby the data centres servers are submerged in a thermally conductive liquid. Such technologies could be key to overcoming the water scarcity issue in the region, thereby unlocking the data centre growth opportunity.

“In terms of power supply, it is a different environment to the UK,” he adds. “In the UK the electrical infrastructure has been developing since the Victorian times, but in the Middle East the infrastructure is still disaggregated – with isolated systems clustered around the larger cities. But in the coming decades there will also be opportunities for increasing solar generation – this is a region that has space and sunshine in abundance.”

Can society benefit from data centres’ waste heat? Read our next article: ‘Should we be warming to hyperscale data centres?’.

Six key takeaways:

Energy challenge – Hyperscale data centres (used by tech giants like Microsoft, Meta, Google) consume massive amounts of electricity, sometimes equivalent to entire cities. The UK’s Sizewell C nuclear power station (3GW) could only power three hyperscale data centres. The UK’s projected peak electricity demand could double by 2050, but AI growth may push it even higher.

New approaches – Operators are exploring on-site renewables, private wire agreements, and small modular nuclear reactors (SMRs). Repurposing old coal or nuclear power stations for data centres is becoming common due to existing grid connections. In the US, private equity firms are buying old power plants to shorten grid access wait times (currently 2–4 years).

Waste heat – Data centres produce waste heat, which can be reused in thermal energy networks to benefit communities. Some operators offer free heat to cities, helping offset social concerns about energy costs being passed to ratepayers. Co-locating data centres with power plants can improve economic viability and reduce community resistance.

Water demands – Data centres require significant water for cooling, posing challenges in arid regions like the Middle East. Innovations like liquid immersion cooling and water reuse/recycling are being explored to address scarcity.

Nuclear option – SMRs are gaining traction in the US and Canada, with potential for resilient, scalable power for data centres. Cost and stability will be the key drivers in determining the winning energy technologies.

Strategic focus – The Middle East’s experience with giga-scale infrastructure positions it well for rapid data centre growth.

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[1] https://www.bbc.co.uk/news/articles/cx25v2d7zexo

[2] https://www.constellationenergy.com/newsroom/2025/constellation-meta-sign-20-year-deal-for-clean-reliable-nuclear-energy-in-illinois.html

[3] https://insideclimatenews.org/news/03062025/meta-constellation-nuclear-power-deal/

[4] MIT Technology Review: (2025): https://www.technologyreview.com/2025/08/21/1122288/google-gemini-ai-energy/

[5] , PwC

[6] Data Centers in the Middle East: The Digital Oil, Forbes: