Data center growth faces bottlenecks despite strong long-term outlook, Rystad says

By Romel S. Gurky

Global data center capacity is expected to expand rapidly through the end of the decade, but significant structural constraints could limit how much of the announced pipeline is ultimately realized, according to Rystad Energy in its Monday publication.

In its latest analysis, the firm said global data center capacity could double by 2030, although this remains well below the 627 gigawatts (GW) of total announced projects.

Rystad estimates that less than half of the announced capacity, or around 262 GW, is likely to materialize when accounting for real-world constraints such as financing, infrastructure readiness and project execution risks.

The report highlights power availability as the most immediate bottleneck, with slow grid connection processes and potential supply shortages limiting near-term development. While some operators are turning to on-site generation or alternative locations, these measures are not sufficient to fully address the issue.

Supply chain constraints are also emerging, particularly for critical components such as transformers, generators and IT hardware, contributing to longer project lead times and higher costs.

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At the same time, sustained returns are seen as essential to maintain the pace of investment, as large capital inflows continue to attract new entrants into the sector. However, Rystad cautioned that not all new players may have the capability to deliver projects at scale.

The firm noted that the rapid growth of artificial intelligence is accelerating demand for data center capacity faster than physical infrastructure can be deployed, further widening the gap between expectations and execution.

Regulatory frameworks for data center development are also still evolving globally, adding another layer of complexity to project development.

Despite these challenges, Rystad said the long-term outlook remains strong, describing the sector as being at an early stage of a major investment cycle that could reshape energy demand.

The report estimates that global spending on data centers has already exceeded $770 billion annually, with the sector emerging as a major driver of electricity demand. In the United States alone, data centers could account for up to 14% of total power consumption by 2030.

Rystad added that future growth will depend on how effectively developers align power supply, emissions targets and project economics, while navigating infrastructure and regulatory constraints.

Editing by Alexander Ginting