Data centers are often viewed as a new source of strain on power systems, disrupting traditional infrastructure needs and raising costs. But this captures only part of the story. As data-center demand accelerates, it is also leading to a broader redesign of the global energy system, driving innovation in technology and business models. With implications well beyond AI infrastructure, this shift is helping solve challenges that have been around since before the AI boom, such as aging grid infrastructure and supply chain constraints.
Has the debate about resilient AI demand been settled?
A year ago, boards across sectors were still asking if AI demand was permanent—whether all this extra power would really be needed and how advances in cooling and efficiency would affect that. Recently, conversations with our clients have shifted toward the recognition that the long-term impact of AI is real, here to stay, and likely to continue to accelerate.
The scale of capital allocation reflects that shift. A strong signal that the AI trend is truly a transformative one is what is happening in the US utility sector. Recent headlines point to a proposed merger between major US players that could create a utility enterprise far larger than anything previously seen in the sector.1
What is significant is not just the quantum of capital, but the way AI is beginning to shift capital allocation in one of the most regulated, slow-moving industries. Significant capital is being put into the energy sector, and we predict that global spending on data centers could reach $7 trillion by 2030.2 That is a real structural shift.
This is driven primarily by three investor groups. First, private equity and other private capital investors are investing directly in data centers and through dedicated platforms and vehicles, while also showing growing interest in equipment, component manufacturing, the supply chain, and related services. Second, more traditional players in the energy industry, including in utilities and manufacturing, are increasingly investing in the space. The third group are the hyperscalers. In the United States, major cloud service providers that own and operate data centers with extensive global footprints continue to drive significant investment—just as Chinese and Southeast Asian hyperscalers are expanding into Europe in concerted efforts.
Communities have concerns. What are the implications for industry?
Public concerns around data centers are now one of the top items on boardroom agendas, which have largely centered on affordability and environmental impacts, including water scarcity and land use.3 Large loads do put pressure on grid infrastructure, and rising energy costs often fall disproportionately on residential customers.
But as is often the case, the reality is more nuanced. In many markets, today’s cost pressures were building before the recent wave of data center demand. Aging infrastructure, deteriorating transmission lines, supply chain bottlenecks, and years of underinvestment were already making system expansion more difficult and more expensive. In the United States, for example, infrastructure was scaled to growth projections that did not materialize for two decades, and the system now faces the challenge of expanding at a moment when labor and equipment costs are significantly higher.
The industry is responding. For example, new tariff structures are being designed in US states such as Louisiana and Ohio, which aim to front-load data center development costs for urgently needed new capacity, shielding residential customers from the burden.4
In Europe, the affordability challenge intersects with a deeper structural challenge of landed electricity costs that are higher than any other region on average.5 The EU’s Future of European Competitiveness report identified energy dependence as the root of Europe's competitive decline, a problem that predates the recent wave of data center development and was exacerbated by the conflict in Ukraine and the instability in the Middle East.6 This has led some European leaders to frame demand for AI and computing power as an opportunity to unlock innovation and solve for more affordable, reliable, and clean energy.
How are data centers driving innovation in the energy sector?
The data center build-out can play a role as a catalyst for business model and technology innovation across the energy sector.
One area is generation. For example, nuclear, including small modular reactors and other advanced designs, is illustrative of how data centers are starting to provide the demand certainty that emerging technologies need. Amazon is deploying capital in nuclear energy as part of its broader strategy to help power its future data center operations.7 Carbon capture, utilization, and storage (CCUS) pilots are continuing to focus on repurposing oil and gas assets. Geothermal is benefiting from shale and fracking technologies developed for upstream oil and gas. Chevron has announced a power development play directly linking its legacy oil and gas footprint to data center supply.8
At the grid level, the changes are equally significant. In Ireland, after the end of the grid connection moratorium, microgrid developers have commissioned their first large installations for data center loads. In Greece, conventional generation assets are being repurposed, combined with hydro reservoirs and solar installations, to create hybrid microgrids serving data center demand.
Another aspect of innovation is the rise in new delivery models. Because data centers are often built more quickly than grid reinforcements can be made, developers and utilities are beginning to move toward alternative solutions, including on-site generation and bespoke energy partnerships. For example, in Iberia, some energy players are partnering with data center developers to build critical new capacity from scratch—integrating power generation, land use, water utilities, and construction in a single coordinated model.
Perhaps the most structurally important shift is that data centers are becoming prosumers—not merely consuming electricity but participating more actively in grid management. They are beginning to shift loads across geographies and time zones to optimize for renewable availability. In the Nordic countries, waste heat from data centers is already being captured and used to heat homes. Here, data centers of the next decade may help bring more balance to the grid, instead of just drawing from it.
What strategic moves will matter for the long term?
In the next ten to 15 years, some major data center sites may be as large as five to ten gigawatts, comparable to the current average power draw of New York City. This could require data centers to be built where the energy is, rather than connecting them from a distance.
Microgrids, hybrid generation models, prosumer frameworks, and purpose-built energy partnerships are helping to create blueprints for future competitive infrastructure. Importantly, even though electricity represents 60 to 70 percent of a data center’s operating costs, they can run at EBITDA margins as high as 80 percent—which means there is real economic room to absorb innovation risk in pursuit of a more resilient, lower-cost model. Some tariff structures are already being redesigned around this.
Data center build-out is also likely to blur the lines of traditional industries. In the near term, we could expect to see energy companies moving into data center infrastructure, bundling power as part of an integrated offering; data center operators moving more boldly into energy sourcing and generation; original equipment manufacturers moving into the energy-as-a-service market; and microgrid providers making more significant moves.
Looking ahead, it seems likely that the investment cycle now underway is building something larger than AI infrastructure. Grid capacity, generation diversity, and system resilience are being augmented at a pace and scale that will serve the broader economy long after the current AI build phase matures.
1 “NextEra Energy and Dominion Energy to combine, creating the world’s largest regulated electric utility business and North America’s premier energy infrastructure platform benefiting customers,” NextEra Energy press release, May 18, 2026.
2 “The $7 trillion data center build-out: How industrials can capture their share,” McKinsey, March 27, 2026.
3 “The data center balance: How US states can navigate the opportunities and challenges,” McKinsey, August 8, 2025.
4 Nolan Mckendry, “Regulators weighing new rules for data centers, major power users,” The Center Square, May 7, 2026; Sarah Donaldson, “Ohio House bill would extend data centers tariff to rest of state,” The Statehouse News Bureau, March 2, 2026.
5 “Electricity prices by country: Global comparison of residential and industrial rates,” Global Electricity, June 10, 2026.
6 Mario Draghi, The future of European competitiveness, European Commission, September 3, 2024.
7 “How Amazon is preparing for the energy needs of the future,” Amazon News, May 8, 2026; “Amazon backs X-Energy IPO to support AI power needs and valuation,” Yahoo Finance, April 27, 2026.
8 “Engine no. 1, Chevron and GE Vernova to power US data centers,” Chevron press release, January 28, 2025.