Governments worldwide are tightening regulations on the construction of data centers due to concerns about their enormous energy consumption and the impact on national climate goals and electricity grids.
According to the Financial timesCountries such as China, Singapore and Ireland have imposed restrictions on new data centers in recent years to comply with stricter environmental regulations.
Elsewhere, Germany and Loudoun County in Virginia, US, have introduced measures such as restricting permits for data centers in residential areas or requiring them to contribute renewable energy to the grid and reuse the waste heat they generate.
Increased demands of AI
The biggest threat to new projects is in Ireland, a hub for server farms built by cloud computing giants for its low tax rate and easy access to high-capacity undersea cables for global internet traffic. The decision by the country’s energy and water regulator in 2021 to restrict new data connections to the electricity grid led to data center operators Vantage, EdgeConneX and Equinix rejecting permits for new projects in Dublin last year.
The US is home to a third of the world’s 8,000 data centers and their energy consumption is growing significantly, due in no small part to the increased demands of AI. Technology companies like Microsoft, Alphabet and Amazon are under increasing pressure to take a more active role in generating renewable energy and working on energy efficiency measures to keep their data centers running.
While the tech giants are all investing in wind and solar energy, Microsoft has started exploring the nuclear option to fuel some of its data centers.
Analysts at Barclays warn that governments have yet to consider the impact of increasing internet use on their electricity networks, predicting that similar restrictions will be introduced globally in the coming years.
This could increase pressure on the $220 billion data center and cloud industry, which is expected to rise to $418 billion by the end of the decade as global demand for data increases.