The Future of Data Centres: Key insights from industry experts

Historically, the financing of data centre projects posed a challenge due to the ambiguity in classifying these assets – as infrastructure, services, or otherwise. However, in recent years, data centres have become a more established asset class, making financing easier and attracting an increasing number of players into the sector. This influx of participants has intensified competition for financing, a trend that stakeholders need to navigate carefully.

Data centre builders and operators are pursuing a range of service models to cater to the evolving needs of their clients. These range from co-location and wholesale to hyperscale and the emerging "gigascale". Additionally, the growth of "edge services", "GPU-as-a-Service", and dedicated-AI builds are diversifying the market further. This variety is driving the growth of different players in the market, leading to a dynamic and competitive landscape. While this trend is expected to continue in the short-to-medium term, it may eventually lead to consolidation, triggering further M&A activity.

Data centres operate within complex ecosystems that present several challenges. They require substantial resources, including energy, water and physical space, and are heavily dependent on the availability of a skilled workforce and favourable regulatory frameworks. As data centres grow, they place increasing stress on local power grids, water resources and land. This has led to some governments expressing concerns about unchecked data centre growth, potentially leading to regulatory headwinds that operators need to anticipate and manage. These factors collectively impact the ability of data centre operators to meet customer demands and expand their operations.

Large-scale data centres represent a greenfield offering significant potential for growth and innovation. However, this opportunity comes with the challenge of ensuring design flexibility to accommodate diverse customer needs while minimizing the risk of technical obsolescence. This requires a careful balance between customization and standardization in design and operation.

Sustainability has moved to the forefront of priorities for data centre operators, as well as their investors, lenders, and customers. The industry is recognizing that Renewable Energy Certificates (RECs) are no longer sufficient to meet increasing demands for sustainable operations.