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The recent news that SoftBank and OpenAI would be making a $500-billion investment in data centers and other necessary infrastructure for AI highlighted the explosive growth opportunities in data center construction.
The related increases in the demand for the electrical construction materials, contractor installation and design services they require is quite unlike anything the electrical construction industry has ever seen. Over the years, there’s been big business opportunities in speculative office construction, energy-efficient lighting retrofits and the installation of power quality industrial automation products. But the dollars being spent on new data centers — and the electrical products that help power them — may be unmatched.
By all sorts of different economic metrics, data center construction continues at an impressive rate. The U.S. Census Bureau recently started breaking out data center construction in its monthly Value of Private Construction Put in Place data, and through Nov. 2024, data centers were enjoying one of the highest year-to-date (YTD) growth percentages of any project category in 2024, with a +43.1% YTD increase to $31.5 billion in spending. The overall power demand new data centers are putting on the U.S. electrical grid is getting more intense, too. A recent Goldman Sachs research report said data centers currently consume 1% to 2% of overall power, but that this percentage will grow to 3% to 4% by 2030.
Why the doubling of power demands? AI ( artificial intelligence) is a big reason. A recently published Goldman Sachs report said a ChatGPT query needs nearly 10 times as much electricity to process as a Google search, and that despite the steady growth of data centers over the past few years, they have displayed a stable appetite for power, even as their workloads mounted. “Now, as the pace of efficiency gains in electricity use slows and the AI revolution gathers steam, Goldman Sachs Research estimates that data center power demand will grow 160% by 2030,” the report said.
This all means new business potential for contractors, design engineers and other electrical professionals involved with data center construction. While electrical products typically account for 10% or so of the total cost of a construction project, they can apparently account for more than twice that percentage in a data center. Along with the cost of service equipment, cable tray or conduit, fiber-optic/data and power cabling, connectors electrical cabinets and other basic electrical system materials, these facilities require sophisticated cooling, standby generators/power backup and security or signaling systems as well.
The U.S. Chamber Technology Engagement Center (C-TEC) said in a post that the American Society of Professional Estimators found that electrical equipment costs are approximately 25% of a data center project. Data centers will continue to get larger in the next few years, and the equipment within will get more sophisticated. According to CBRE real estate research, “The rise of AI and machine learning is driving significant changes in data centers, including increased use of graphics processing units (GPUs) and liquid cooling to reduce the heat from these more power-intensive applications.”
The demands for more power are forcing a notable shift in the locations where new data centers will be built. While the famous “Data Center Alley” west of Washington, DC, in Fairfax and Loudon Counties has the most dense concentration of data centers in the nation, new facilities are having a tougher time being approved there because of their demand for power and water.
A recent Bloomberg report said Dominion Energy, the primary power provider for this region, said it expects the time it takes to connect large data centers to the electric grid to “increase by one to three years amid a surge in requests, bringing the total wait time to as long as seven years.” A post at www.datacenterknowledge.com said in March 2024, northern Virginia had 245 data centers covering 25,000,000 sq ft that consume 3.6 GW of power.
Despite the concerns about power availability in some markets, the size of data center projects appear to be increasing. In the chart on below, you will find more than 30 data center projects valued at more than $500 million that either broke ground or were in the planning stage in 2024, with $17 billion of these projects valued at more than $1 billion. Some of the largest projects top $10 billion in total contract value. One example is Project Sail, a massive 13-building data center project planned for Coweta County southwest of Atlanta that would have 4.9-million-sq-ft under roof. A post at www.govtech.com said the Project Sail project is valued at $17 billion. The Atlanta metropolitan area saw an unprecedented amount of data center development in 2024. Through mid-year 2024, CBRE said the data centers under construction in Atlanta increased by 76% year-over-year to 1,289.1 MW.
Louisiana will also be home to a new data center development worth $10 billion in total construction value. Meta recently announced plans for a $10-billion development in Richland Parish in northeast Louisiana. Meta said in a Facebook post, “We are excited to announce that Richland Parish, LA, will be home to Meta’s newest data center — our 23rd data center in the United States and 27th in the world. This custom-designed four million-sq-ft campus will be our largest data center to date.”
A post at www.datacenterdynamics.com said construction of the data center campus will total more than 4 million sq ft and was expected to break ground in Dec. 2024 and to continue through 2030. Turner Construction Co., DR Construction and M.A. Mortenson will build the data center, according to a post at www.turnerconstruction.com.
Data centers will continue to be big business for electrical contractors for the foreseeable future. Many of the larger electrical contractors have been in this niche for many years. For example, Cupertino Electric says on its website (www.cei.com) that it has “designed, installed and commissioned more than 11.5 million square feet of data center space since the 1990s.” EMCOR also promotes the work it does in data centers and says on its website (www.emcor.com) that, “EMCOR companies have completed 875 mission-critical data center projects since 2006, including 450-plus electrical projects; 250-plus mechanical projects; 100-plus facility service projects; and 75-plus fire projects.”
— Jim Lucy