AI boom drives global power demand
Author: Joe Peck
Artificial intelligence and data centre expansion are reshaping global power markets, creating infrastructure constraints and changing investment priorities, according to global commercial real estate and investment management company JLL.
North American data centre capacity is projected to nearly double from 57GW to 109GW by 2030, with hyperscalers expected to spend $200 billion (£148 billion) on capital expenditure in 2026, a 51% increase on 2025.
JLL’s global Energy & Infrastructure Advisory platform says securing reliable power infrastructure has consequently become a key constraint for the AI economy.
Transmission infrastructure, originally designed around large, centralised power stations, is also facing pressure from the growth of renewable energy sources. This has contributed to grid congestion across major markets in the USA, Europe, and Asia Pacific.
Interconnection queues for new renewable projects now extend to four years or more in some regions, while some areas have paused new connections entirely.
The impact varies between markets. In the USA, interconnection reform and exposure to merchant power are influencing deal structures. European regulatory frameworks are changing at different rates between member states, whilst data centre construction is outpacing grid planning in several Asia Pacific markets.
“We’ve seen a generational shift in power demand as a result of data centres and AI,” says Steven Jack, Head of Energy & Infrastructure Advisory, EMEA at JLL. “This was not on the radar until very recently. Utilities that were forecasting modest growth are now grappling with figures nearly double their previous estimates.
“For any energy developer, without a grid connection, you don’t have a project. For investors, this grid congestion translates directly into risk, but it also creates a scarcity premium for assets that provide or secure grid access.
“In a world of geopolitical uncertainty, generating your own power is about energy sovereignty or energy autonomy and it’s simply the cheapest way to produce power today.”
Battery storage gains importance
Battery energy storage systems (BESS) are emerging as key infrastructure for managing grid constraints and renewable energy intermittency.
“Batteries are a very important component and asset in that balancing act,” notes Matt Eastwick, Group Head and Senior Managing Director, Energy & Infrastructure Advisory, US at JLL. “They act as shock absorbers for constrained grids, charging when power is cheap and abundant, then discharging when demand and price are high.
“We’re in a brave new world. Power demand is rising faster than grids were built to handle. Capital is available, but certainty is harder to find. In this environment, winners will be those who factor grid constraints and power availability into their investment decisions from day one.”
Grid access challenges are also prompting close partnerships between energy developers and data centre operators. Technology companies are increasingly becoming direct participants in energy markets, including through the acquisition of operating renewable assets to secure power supplies.
James Cameron, Head of Energy & Infrastructure, APAC, JLL, explains, “In liberalised markets in Asia Pacific (such as Australia, India, Japan, and the Philippines), status and location of grid connection is the first question for investors and has the largest valuation impact for development assets.
“In Australia, where legislation is expected to require that data centre developers ensure new renewable power generation matches additional capacity, we’re seeing a range of innovative models, from joint ventures to [the] inclusion of batteries in data centre design to facilitate grid connection.
“While the solution will differ depending on circumstances, it is clear we will see many more partnership opportunities and innovative solutions between data centre and energy clients across the region.”
JLL says power access has increasingly become a factor in the viability and valuation of data centre and energy assets, with investors looking beyond conventional power generation to assets that can provide greater flexibility and certainty in constrained markets.
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