Data center operators face a crucial decision when it comes to choosing the location for new data centers. The impact of this decision can have long-lasting effects on various aspects of the operation. At Data Center World 2025, the focus was on the strategic placement of data centers, especially the emergence of ‘AI factories’ that cater to high-performance workloads.
The location of a data center plays a significant role in its planning and development. It affects construction costs, leasing rates, access to skilled IT personnel, proximity to customers, power pricing, tax incentives, and exposure to risks. Despite the complexities involved, the development of data centers is rapidly accelerating, with 35 GW-scale projects announced in 2024, a significant increase from the previous year.
Colocation providers and hyperscalers added 122 GW of power capacity globally in 2024, indicating a robust growth trend. However, this surge in activity has led to a scarcity of available capacity in certain markets, giving colocation providers and hyperscalers a competitive edge. Alternative markets with potential for growth include Northwest Indiana, Pennsylvania, Kentucky, and the Kansas City metro area.
Moreover, promising global data center markets outside the U.S. include Alberta in Canada, Vietnam, Milan in Italy, and Australia. These regions have seen significant growth in data center capacity, driven by factors such as regulatory support, community acceptance, land availability, and power potential.
Tax incentives and tariffs also play a crucial role in determining the feasibility of establishing data centers in certain locations. While tax incentives in the U.S. may be limited, arrangements to become symbiotic partners on the grid, similar to the Wonder Valley project in Alberta, can be beneficial. Power availability remains a critical factor, with data centers increasingly looking towards self-generated power to meet the demands of AI-driven workloads.
In conclusion, as AI continues to reshape the digital economy, data center operators must prioritize power availability in their location decisions. Following the power to regions like West Texas, Alberta, or Pennsylvania, where energy resources are abundant, will be essential for the future of AI infrastructure. By aligning with energy flows and welcoming policies, data center operators can ensure the success of their operations in the rapidly evolving digital landscape.
