Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--Of the industries tracked by Industrial Info, data centers currently rank third in total project spending, after power generation and mining. But by the end of this year, data centers could be much closer to the top in spending levels, according to David Pickering, Industrial Info's vice president of research for Industrial Manufacturing.
Because of the large power demand from data centers, many projects will be required to build generation capacity to provide power for themselves and at least some overflow into the grid. When coupled with an expected doubling in global electricity demand in 2026 from 2022's 460 terawatt-hours, the stress on the power grid becomes clearer.
Analyzing the numbers, current power generation spending is at $11.1 trillion, mining is at $1.3 trillion and data centers are at $1 trillion, illustrating the magnitude of the expected growth for this year.
"With 3,800, almost 3,900 projects and a trillion dollars' worth of activity actively being planned, it is anticipated that despite the lower number of projects, by the end of this year, data centers will surpass mining as the second largest sector in the world," Pickering said. "And there's a possibility that semiconductor computers could also pass mining, given their close relationship with data centers."
Where are the data centers?
For data centers planned for 2025, North America leads the way, with Industrial Info monitoring 521 projects with a total investment value (TIV) of $212.2 billion, and accounting for 50% to 60% of the world's projects. The top location is northern Virginia with 127, as it is near Washington, D.C., and the government's massive databases.
Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here for a list of detailed North American project reports.
Asia is second, with 308 projects and a TIV of $39.5 billion. Europe is third, with 301 projects and a TIV of $37 billion. Many European data centers are in Nordic regions (where the cold climate reduces data center cooling costs), the U.K. and Germany. Subscribers can click here for the Asian project reports and click here for the European project reports.
Who's building them?
It will be no surprise that U.S. internet behemoths Microsoft Corporation (NASDAQ:MSFT) (Redmond, Washington) and Amazon (NASDAQ:AMZN) (Seattle, Washington) are at the top, with Google (Mountain View, California), Blackstone Incorporated (NYSE:BX) (New York, New York), Meta Platforms Incorporated (NASDAQ:META) (Menlo Park, California), DigitalBridge Group, Incorporated (NYSE:DBRG) (Boca Raton, Florida) and Tract (Denver, Colorado) round out the top seven.
How will they be powered?
With worldwide power grids already expecting major growth from electric vehicles and other uses, and an increasing reliance on unsteady wind-and-solar-driven generation, the 24/7 nature of data center power demand is spawning some new solutions around the world.
"Basically," Pickering said, "with the data center development that we're seeing right now, power demand is incredibly high for data centers as you saw previously, with 127 gigawatts of planned data center capacity that needs to be supplied somehow. Existing infrastructure is somewhat inadequate to supply this, so they're looking for alternatives."
"For this power, there's more of a reliance on natural gas as they move away from green energy to a certain extent," as long as it's available. Industrial Info expects natural gas demand to increase by 5 billion cubic feet per day in North America, according to data from major regional suppliers.
Backup generators, which formerly relied mostly on diesel, also are converting to natural gas, so much so that there has been a shortage of smaller natural gas generators.
Citing the potential restart of Three Mile Island to add 800 megawatts (MW) of power for Microsoft data centers, Pickering pointed out that nuclear power is gaining new interest as well. Subscribers to Industrial Info's GMI Power Project Database can click here for the project report.
But since nuclear plants take years to restart, that energy "probably won't come into play until 2026 or 2027," he said. Small modular reactors, or SMRs, also are being planned for data center power.
Geothermal is being employed where it is available, particularly in some western U.S. states.
More and more, data center projects are providing their own power generation and supporting the grid with any excess power. "A good example of that is the Stargate project that was announced last week by President Trump and that group," planning to invest $500 billion for data centers and power. The first two are under construction in Abilene, Texas, with eight more planned for that location in future years. Subscribers can click here for a list of related project reports.
The associated power plants will produce 420 MW for those two buildings, he said.
Subscribers can click here for the project reports mentioned in this article and click here for the related plant profiles.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
