Scorecard: Looking Back at Data Center Frontier’s 2024 Industry Predictions
2. Rethinking Energy on Each Stage
PREDICTION: Utilities are struggling to improve transmission networks to help the surging requirement for electrical energy to energy knowledge facilities. CBRE just lately stated that knowledge middle building completion timelines have been prolonged by 24 to 72 months on account of energy provide delays. Though the constraints in Northern Virginia have made headlines, energy availability has shortly turn out to be a worldwide problem, impacting main markets in Europe and Asia in addition to U.S. hubs like Ashburn, Santa Clara, and sections of Dallas and Suburban Chicago. Final 12 months we predicted the rise of on-site energy technology, however we’ve but to really see this at scale. However knowledge middle operators are engaged on a spread of latest approaches to energy. Anticipate to see improvements in energy proceed as knowledge facilities search higher visibility into their energy sourcing.
MASSIVE HIT: This prediction was an enormous “Hit,” as evidenced by 2024 knowledge from main industrial actual property companies CBRE, JLL, and Cushman & Wakefield, and different sources. All year long, knowledge middle operators reported going through important challenges in securing satisfactory energy from utilities, resulting in elevated curiosity in adoption of on-site energy technology options, as reflected by many industry discussions this 12 months. The underside line on this prediction could be the discharge of this 12 months’s DOE-backed report indicating that U.S. data center power demand could nearly triple within the subsequent three years, probably consuming as much as 12% of the nation’s electrical energy, underscoring the urgency for various energy options. By way of the biggest knowledge middle markets, VPM and others famous how Dominion Vitality is projecting unprecedented energy demand from data centers in Virginia, posing important challenges for accommodating this trade progress within the coming many years. In a noteable effort to shore up that hole, Dominion Vitality, American Electrical Energy (AEP), and FirstEnergy this 12 months reached a joint planning agreement to suggest regional transmission initiatives throughout the PJM footprint, aiming to strengthen electrical reliability over the subsequent decade.
By way of utilities fighting energy demand, CBRE this year reported that low provide, building delays, and energy challenges are impacting all markets. For instance, highlighting the worldwide nature of energy constraints, Querétaro, Mexico, has solely 0.6 MW out there for brand spanking new knowledge middle initiatives. JLL famous that power challenges are not dampening record demand for U.S. data centers, and emphasised that whereas demand is excessive, energy availability stays a crucial concern. CBRE’s analysis additionally said that problem in procuring crucial tools may result in energy supply delays of as much as 4 years, extending knowledge middle building timelines considerably. For its half, Cushman & Wakefield noted that the place utility suppliers have been unable to supply energy promptly, sure operators have collaborated with energy corporations to ship substations, transmission strains, or supply microgrid energy. The agency famous that many of those agreements at the moment are being signed immediately with third-party power technology builders, with wind, photo voltaic, battery storage, pure fuel, and even geothermal developments shifting shortly throughout markets.
In terms of on-site power generation adoption, one main instance from the previous 12 months is Bloom Vitality partnering with AEP to deploy gasoline cells that convert pure fuel into electrical energy, offering a substitute for overburdened grids. Barron’s reported that AEP plans to buy as much as 1,000 megawatts of those cells, with a confirmed contract for 100 MW. By way of fresh data center nuclear energy initiatives, there have actually been too many over the course of the previous 12 months to succinctly cite right here. The latest main instance is Oklo, the ever-present new nuclear start-up backed by Sam Altman, this month entering an agreement with Switch to provide as much as 12 GW of electrical energy for knowledge facilities as produced by small modular reactor (SMR) nuclear installations over the subsequent 20 years. Final 12 months Oklo additionally introduced it had secured partnerships to provide up to 750 MW of power for U.S. data centers, as only one indication of the trade’s regular shift towards factoring in modern on-site energy technology options.
All such knowledge factors corroborate our prediction, demonstrating that in 2024, utilities are certainly struggling to improve transmission networks to satisfy the surging electrical energy necessities of knowledge facilities. This has led to prolonged building timelines, a worldwide impression on main knowledge middle markets, and ongoing heavy curiosity in deploying modern on-site powering options as operators search higher visibility and management over their power sourcing.
