Global Data Centre Growth Faces Delays Amid Power Constraints

The global data centre industry is experiencing significant delays and cancellations due to power, cooling, and supply-chain constraints. Bernstein's research predicts an easing of these conditions only after 2026, with demand for AI accelerating and growing construction challenges in core US and European markets.

The global data centre expansion is encountering significant delays as capacity is pushed out and cancellations rise, according to a Bernstein research report. The firm predicts these tight supply conditions will begin to ease after 2026, with the pace of cancellations expected to accelerate into 2027 due to power, cooling, and supply-chain constraints.

The report examines the pipeline across hyperscalers, colocation providers, and enterprise builds, noting that while announced capacity remains substantial, the conversion to operational power is lagging. Bernstein estimates that 35-40% of globally announced capacity is at risk of delay or cancellation, due to bottlenecks in grid connections, transformers, and liquid-cooling infrastructure essential for AI servers.

This issue is most severe in key US and European markets, like Northern Virginia, Frankfurt, and London, where utility interconnection queues extend 3-4 years. As a result, operators are turning to secondary markets and retrofits, compounded by rising construction costs. Bernstein notes that costs per MW have increased by approximately 20-25% since 2023, driven by heightened prices for electrical equipment, steel, and specialized labor. Lead times for high-voltage transformers and switchgear remain at 80-100 weeks, further slowing project timelines.

Despite these setbacks, the long-term outlook is positive, with AI demands keeping pace and backlog expected to clear post-2027 as new power resources and standard cooling designs are adopted. Hyperscalers are set to prioritize their massive campuses, while colocation providers focus on densification and edge sites. Bernstein projects a disparity where companies with secured resources will advance, whereas those reliant on future utility allocations may face financial write-downs. Suppliers specializing in liquid cooling and power distribution are likely to benefit.

The report concludes on a cautiously optimistic note, acknowledging continuous demand for data centers but forecasting a 'lumpier' growth path with notable delays during 2025-2026, before a potential resurgence later in the decade.