AI and Cloud Computing Fuel Global Data Centre Construction Boom — But Risks Are Rising
A new report by Allianz Commercial reveals that artificial intelligence (AI) and cloud computing are driving a record-breaking boom in global data centre construction. The demand for heavy computing power and scalable digital infrastructure has triggered massive investments, with global spending expected to reach $7 trillion by 2030. Tech giants like Amazon, Microsoft, and Google Cloud dominate the expansion, accounting for nearly two-thirds of global cloud revenue, while China’s Alibaba and Tencent continue to pour billions into new hyperscale facilities.
The scale of investment is staggering. Once priced between $200 million and $300 million, some data centre projects now exceed $20 billion. Allianz Commercial experts note that the average data centre today costs between $500 million and $2 billion, driven by complex requirements and the need for reliable energy supplies. Such projects employ tens of thousands of workers and require precision coordination, as even minor construction delays or faulty workmanship can result in costly losses.
The United States remains the world’s largest data centre market, expected to cover nearly two-thirds of global power demand with 81 gigawatts by 2028. China’s rapid expansion is close behind, with the Greater Beijing area accounting for 10% of global hyperscale capacity. Europe, while trailing, is catching up fast — experiencing a 43% annual increase in pipeline activity led by London, Dublin, Amsterdam, and Frankfurt. These hubs are racing to meet the digital economy’s escalating needs for storage, speed, and security.
While the boom signals opportunity, it also introduces new risks. Power consumption by data centres is projected to more than double by 2030, reaching around 945 terawatt-hours — more than Japan’s total annual usage. Operators are turning to renewable energy, gas, and even small nuclear reactors to reduce reliance on overstressed power grids. Meanwhile, the growing use of lithium-ion batteries in server rooms heightens fire risks, and cooling systems can consume up to 19 million litres of water daily, equalling the needs of a small city.
Despite the momentum, experts caution that the boom could face a plateau. Rising costs, environmental pressures, and uncertain future AI demand may slow growth. “There are no clear signs that the data centre expansion has peaked,” says Darren Tasker, Head of Construction, Americas at Allianz Commercial. “But as technological advances evolve rapidly, over-investment and stranded assets could become real risks.” For now, the world’s digital backbone continues to expand — powered by AI, cloud computing, and the relentless race for data dominance.
source: techeconomy