Booming demand for artificial intelligence is encouraging major technology firms and their suppliers to explore converting old power plants and industrial facilities into data centers.
Microsoft, Google and Amazon are investing billions of dollars in constructing data centers to run cloud computing and AI services. However, it’s becoming increasingly difficult to search out suitable locations with sufficient power supplies for the power-hungry facilities.
Many data center markets are “severely constrained when it comes to land availability and power supply,” which in turn has fueled interest in smaller markets and “more complicated locations” corresponding to old power plants, says Adam Cookson, head of land transactions on the EMEA data center advisory group of real estate firm Cushman & Wakefield.
There are “increasing opportunities” for the owners of such assets, he added.
Daniel Thorpe, head of information center research at real estate group JLL, said developers of huge data center sites would search for locations including “infrastructure sites or power plants.”
“Typically, it's a big 'hyperscale' facility, akin to an influence plant,” he added, referring to the most important cloud computing providers corresponding to Microsoft, Amazon and Google.
In parts of the US and Europe, coal-fired power plants are being retired but can have the characteristics needed for an information center campus. For example, industrial sites are typically designed for prime power consumption and can have power transmission infrastructure and be near a water source.
Microsoft plans to construct data centers on the sites of the old Eggborough and Skelton Grange power plants near Leeds within the north of England; construction on Eggborough is scheduled to start in 2027. Amazon, then again, is planning a campus on the positioning of the old Birchwood power plant within the US state of Virginia.
According to an individual aware of the matter, not less than one other similar power plant deal is currently being negotiated in Europe.
The technology industry warns that limited availability of electricity threatens to slow the expansion of AI. Other requirements, corresponding to sufficient fiber optic connectivity, would further shrink the pool of potential locations for brand spanking new data centers.
This is driving interest in less traditional options, analysts said. The diverse requirements of AI workloads offer the chance to locate data centers in less centralized areas, further away from major data centers, because “latency,” or the time it takes to send data and receive a response, is less essential for training AI models.
Repurposing sites is also an option. “We are seeing increasing activity from owners of business and energy assets, corresponding to private equity groups, who’re all for partnering to convert the assets into data centers,” said Rahul Mewawalla, CEO of Mawson Infrastructure Group.
Virtus Data Centres, during which Macquarie Asset Management holds a minority stake, recently acquired two sites within the German capital Berlin, a part of which was formerly a solar farm, in addition to an old wartime munitions factory within the UK. The company plans to convert the sites into data centre campuses by 2026.
Thor Equities Group recently acquired a former manufacturing facility in Georgia that, in line with Chairman Joe Sitt, is “equipped with transformers, water, wastewater and natural gas infrastructure” and “well suited to data center development.”
The trend reflects the efforts of the power-intensive Bitcoin mining industry, which is trying to search out latest uses for unused industrial sites, including old aluminum smelters.
Some warned that such conversions could possibly be a lengthy, costly and bureaucratic process and wouldn’t at all times be practical if an influence plant was already disconnected from the grid and never taken under consideration by the local operator.
“It is not going to be easy for the utility to flip the switch and switch the facility back on,” says Mark Dyson, executive director of the carbon-free electricity program on the Rocky Mountain Institute think tank. “These challenges have come up in our discussions with the businesses.”
Thorpe of real estate group JLL said: “Much relies on the specifics of the situation, the prices of conversion, the scarcity of land and the costs of land.”
RMI research has shown that renewable energy could possibly be positioned in parallel with existing fossil fuel power generation and, if more economical, fed into the grid via the plant's existing connections.
Any surplus power generated – grid-connected devices can only contribute a lot energy to the system – could theoretically be used to power an area facility, corresponding to an information center.
