Energy transition: powering data centre growth
November 2025 | TALKINGPOINT | SECTOR ANALYSIS
Financier Worldwide Magazine
November 2025 Issue
FW discusses the energy transition and powering data centre growth with Tom Diplock, Jeremy Wheatland, Amar Gujral and Luke Samuel at L.E.K. Consulting.
FW: What long-term trends are driving growth across different types of data centres – such as cloud computing versus AI training? How sustainable are these trends?
Diplock: Global demand for data centre capacity continues to grow strongly, driven by the expansion of consumer and industrial data usage, the proliferation of the internet of things, and accelerated by the rapid rise of artificial intelligence (AI) applications. Goldman Sachs projects a 165 percent increase in data centre power demand by 2030, underscoring the scale of this shift. While delivery cycles will always face short-term volatility – as seen during the coronavirus (COVID-19) pandemic or with 2024 design changes – underlying demand is resilient and broad-based. Importantly, the scale of developments is also changing, with the average size of new builds doubling over the past decade, moving toward large-scale campus formats to deliver efficiency at both technical and commercial levels. A significant share of this new capacity is being tailored to AI training and inference, while cloud computing continues to account for most workloads. Overall, despite near-term volatility, structural drivers of demand remain firmly in place.
“In the long term, nuclear may allow the data centre sector to further diversify its energy mix.”
FW: How are the power requirements of data centres changing over time?
Wheatland: As data centres become ever more integral to critical infrastructure, power requirements are evolving in scale, complexity and resilience. Outages can now often carry costs exceeding $1m per event, prompting operators to install multiple layers of backup – from batteries for fast response to diesel gensets for sustained support – alongside highly specified grid connections. At the same time, the physical footprint of facilities has grown dramatically, with many now exceeding 50MW. Just as importantly, load profiles are shifting. Traditional cloud computing created steady, predictable demand, but AI inference introduces far spikier consumption patterns, creating opportunities to leverage batteries for peak shaving during periods of high pricing. Together, these trends underscore the dual challenge operators face: delivering hyper-resilient systems while adapting to more volatile power usage. Success will depend on innovative approaches that combine reliability with flexibility in system design and energy integration.
FW: What are the main power system constraints that could hinder data centre expansion? How are operators adapting their sustainability and energy strategies in response?
Samuel: Siting constraints have become one of the most pressing challenges for data centre growth. Historically, operators could choose locations based on grid access and land and water availability, but demand for low-latency performance has concentrated builds around major population and financial hubs. Proximity reduces delays for cloud and AI inference workloads but creates intense pressure on local grids. That tension has already triggered restrictions, with Amsterdam imposing a temporary pause on new builds in 2019 and Dublin introducing a de facto moratorium in 2021 to protect capacity. While AI training facilities can be located further afield, most cloud and AI inference workloads still require metropolitan proximity, which limits flexibility. As a result, siting pressures are expected to persist, underscoring the need for closer collaboration between operators, regulators and utilities to ensure development can continue without overwhelming local systems. Without coordinated action, bottlenecks in grid availability will remain a major constraint.
Gujral: In response to these pressures, operators are adopting increasingly sophisticated energy strategies. One approach is to diversify siting within regions, shifting builds from congested hubs to power-rich areas like West Texas, where supply and grid access are more readily available. Others are firming their systems with behind-the-meter generation – particularly gas – offering greater control and resilience. Power purchase agreements are also being used to lock in renewable supply, though this has become standard practice. More interesting are early signs of utilities requiring flexibility from non-critical loads as a condition for siting. For data centres, the scope to flex is limited, but it may become an important negotiation point. Google, for example, is piloting ways to shift non-critical loads during periods of grid stress. Longer term, operators are helping to build out baseload solutions such as battery-supported microgrids and advanced or small modular reactors.
“In the near term, operators are focusing on solutions that can deliver immediate, reliable capacity.”
FW: What short- and long-term energy supply options are available to meet the growing demands of data centres?
Gujral: In the near term, operators are focusing on solutions that can deliver immediate, reliable capacity. Behind-the-meter gas generation is a prominent option, particularly in the US, where it offers favourable economics and dependable supply. Today, the solution is most often serving as a ‘bridge’ power solution until grid access and interconnection becomes available. In this case, the behind-the-meter solution is then shifted to serve as the backup power. This approach allows data centre developers to reduce reliance on congested grids and exercise more control over uptime. At the same time, firmed renewable solutions are proving their viability, as seen in Denmark’s Prime Campus, which operates entirely on renewable energy while integrating backup biofuel generation for resilience. These models demonstrate that sustainability and security of supply are not mutually exclusive. They also show how operators can pragmatically diversify their energy mix today, leveraging both conventional fuels and renewables. The challenge is to continue scaling these approaches rapidly enough to keep pace with demand, while also setting the stage for longer-term options.
Samuel: Looking to the future, nuclear alternatives are moving from concept to serious consideration within the industry. Data centre operators are playing an active role in shaping how these solutions develop. Amazon’s investment in X-Energy and Equinix’s agreement with Rolls-Royce SMR in the Netherlands reflect a growing recognition that advanced and small modular reactors could provide the dependable baseload capacity the sector needs. These investments are significant because they provide a clear demand signal for novel nuclear projects, potentially catalysing development. However, it is crucial to recognise that these projects are not certain – successful small modular reactor and advanced modular reactor deployment is conditional on the success of a broader operational and financial ecosystem beyond just end users. In the long term, nuclear may allow the data centre sector to further diversify its energy mix, combining with renewables and conventional fuels to create a resilient portfolio capable of underpinning the digital economy for decades.
“As data centres become ever more integral to critical infrastructure, power requirements are evolving in scale, complexity and resilience.”
FW: How must power infrastructure evolve to support the future energy needs of data centres?
Wheatland: The expansion of data centre capacity cannot be delivered without parallel investment in transmission and distribution infrastructure. While generation is critical, it is grid access that ultimately determines the viability of new developments. Investment is already rising in both transmission and distribution networks, with a strong focus on strengthening the distribution layer and expanding access in regions such as the Zaragoza/Aragon area in Spain and West Texas in the US. But financing alone will not solve the challenge. Current regulatory processes often delay interconnection, creating bottlenecks even when physical capacity exists. Improving the speed of response to interconnection requests, alongside developing more innovative pricing mechanisms, will be vital. Without reforms, investment risks being stranded. For operators, this highlights the need to engage not only with utilities, but also with policymakers, to ensure that the frameworks evolve at the pace the sector demands.
Samuel: Alongside regulatory reform, a more flexible approach to infrastructure delivery will be essential. Utilities are under immense pressure, balancing the maintenance of ageing assets with the need for large-scale new build. Expecting them to meet the full weight of demand alone is unrealistic. Private infrastructure providers, including independent distribution network operators, can play an increasingly important role in accelerating delivery and ensuring that capacity is available when and where it is needed. Their agility and ability to mobilise capital quickly make them well suited to complement traditional utilities. To support this, regulators will need to embrace new models of ownership and operation. The future of data centre infrastructure will therefore be characterised by greater collaboration between public and private actors, with utilities, regulators and private contractors working together to deliver the resilient networks that underpin long-term growth.
“Providers that strengthen lifecycle support capabilities now will secure recurring revenues and long-term resilience alongside growth.”
FW: What are the implications of these changes for service providers and original equipment manufacturers within the data centre ecosystem?
Diplock: Original equipment manufacturers (OEMs) and service providers stand at the centre of a significant opportunity, but they will need to navigate mounting pressures. Demand for equipment and services is accelerating, and operators are expecting solutions that combine energy efficiency with high reliability. This will reshape requirements across equipment design, cooling technologies and mechanical, electrical and plumbing delivery. At the same time, procurement models are shifting as hyperscalers exert greater control over supply chains, tightening approved vendor lists and imposing higher expectations on performance and scalability. Providers must therefore expand capacity without compromising quality or delivery discipline, which places real strain on resources, culture and expertise. In the near term, success will depend on rigorous planning and organisational investment. Looking further ahead, as the market matures, replacement, retrofit and maintenance will form a larger share of demand. Providers that strengthen lifecycle support capabilities now will secure recurring revenues and long-term resilience alongside growth.
FW: What key themes and opportunities should investors consider when seeking exposure to the data centre and energy infrastructure space?
Diplock: The sector offers investors a rich landscape of opportunities, but timing and positioning are critical. In the near term, some of the most attractive plays are in technical engineering services, power-focused OEMs and system integrators, and independent distribution network operators. These provide exposure to immediate growth areas and can fit a wide range of strategies – from private equity seeking shorter-cycle returns to core infrastructure funds looking for stable, long-term assets. Competition for high-quality platforms is intense, so investors must move quickly to secure access. The appeal of these assets lies not only in their current demand profile, but also in their ability to scale as the underlying industry grows. As the market matures, there will also be increasing importance attached to providers positioned for replacement, retrofit and maintenance, offering investors exposure to recurring and resilient revenue streams.
Wheatland: Beyond short-term opportunities, the real value will be found in businesses with structural advantages that position them for enduring success. Differentiation is key. That might come from specialised technical capabilities, the ability to operate effectively across borders, or deep, trusted relationships with hyperscalers and major colocators. Scalability is another essential factor: investors should look for companies with proven resourcing models that can expand capacity without compromising delivery. Early-stage engagement in the development cycle is also a powerful advantage, as it allows companies to influence standards and secure specifications that drive long-term market share. Over time, however, the industry will not be defined solely by greenfield growth. Replacement, retrofit and maintenance will become increasingly material, offering a more predictable revenue stream. For investors, the opportunity lies in balancing exposure to growth with businesses positioned to benefit from lifecycle economics. Backing those platforms early will secure access to sustainable margins and resilient long-term returns.
Tom Diplock is global co-head of L.E.K. Consulting’s industrials sector. He has over 19 years of experience advising clients on growth strategy, performance improvement and transaction support. His expertise spans energy and environment, building and construction, industrial technology, and industrial services, including broad experience in data centre and power markets. He can be contacted on +44 (0)20 7389 7200 or by email: t.diplock@lek.com.
Jeremy Wheatland is a senior partner at L.E.K. with nearly three decades at the firm. He has deep expertise across the industrials and energy sectors, advising clients on growth strategy and transaction support. His experience spans market entry and product strategies, business plan development, commercial due diligence, portfolio optimisation, valuation and value-based management. He can be contacted on +44 (0)20 7389 7200 or by email: j.wheatland@lek.com.
Amar Gujral leads L.E.K.’s energy and environment practice in the US and heads the Houston office. He advises energy and investor clients on growth strategy, new product commercialisation and M&A, with expertise spanning power, renewables, energy transition, oilfield services and downstream fuels. He is also a founding member of L.E.K.’s Sustainability Centre of Excellence. He can be contacted on +1 (346) 354 2500 or by email: a.gujral@lek.com.
Luke Samuel is a principal in L.E.K. Consulting’s London office, having joined the firm in 2016. He has broad experience across the industrials sector, with deep experience across energy and infrastructure, including oil & gas, renewables/BESS, e-fuels/SAF, hydrogen, power generation, transmission and distribution, and nuclear. He can be contacted on +44 (0)20 7389 7200 or by email: l.samuel@lek.com.
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