Data centre demand soars but energy consumption a concern
Data centres were the leading investment theme in this year’s Emerging Trends in Real Estate Europe report, produced by the ULI and PriceWaterhouseCoopers. All three regional Emerging Trends reports –for US, Asia and Europe – ranked data centres at or near the top in terms of their investment prospects in 2024.
The trend is driven by the digital transformation which is occurring in all parts of the world and in every economic activity.
“Digitisation is a fundamental theme, a fundamental drive and that’s where the need to store all this data comes from and the need for data centres,” said Thomas Veith, global real estate leader, PriceWaterhouseCoopers.
Veith explained that it is a trend that has been seen over the last 10 years but over the last two years the emergence of AI has increased the need for new data centres significantly.
“The outlook is fundamentally positive with all the opportunities that it brings, but also with the challenge of data security on critical infrastructure and potentially more regulation coming up around that,” Veith told Real Asset Insight’s Richard Betts.
Data centres also present a challenge in terms of energy supply and sustainability because of their high energy use and needs. “It’s one of the most critical pieces when you talk to data centre developers and they reflect that a lot of cities are more and more reluctant to give permission for further data centres because they just can’t yet provide the power that is needed,” Veith continued.
On the plus side, technical improvements mean greater density of use and increased energy efficiency. Along with investment in wind farms and solar parks they are becoming better in terms of ESG.
“But this problem is not really solved yet. I think the industry and real estate investors are focusing more on it because you cannot ignore it,” Veith said.
Currently data centres need 1% to 2% of global energy. “If you look at the projections for 2035 or even up to 2050 and if you just ignore this topic, the energy consumption could be up to 65% of global energy production, which is really unbelievable.”
Veith said that new market solutions will combine the need for improving the energy demands by providing sustainable energy supplies, possibly combined with energy storage solutions. There is also potential to use data centers’ waste heat for heating residential space or for capturing CO2.
