The data center sector is facing a big power constraint. This is due to the convergence of AI at scale and an energy infrastructure that was not prepared to accommodate a huge demand at this pace. Naturally, the grid architecture designed decades ago is not equipped to support today’s technological needs, and not only that, but as AI becomes more deeply embedded into our everyday life, this tension is likely to further impact the direction of the industry for the next decade and beyond.

Power plays a significant role in our strategy at CyrusOne. It influences the location of our data centers and reinforces our commitment to our customers.

While our world becomes increasingly power-intensive, robust stewardship is at the heart of a power-first strategy that prioritizes both reliable capacity and cleaner, more efficient infrastructure.

AI workloads influence data center design

The surge in AI workloads drives a major redesign of data center engineering. This means that there is a shift towards ultra-high-density deployments, advanced liquid-cooling architectures, and bespoke environments.

AI workloads and hyperscale deployments are pushing rack densities from three to five kW to over 100kW per rack, with some experimental systems surpassing 300kW. While demand continues to increase, further efficiency improvements are expected in power delivery, cooling, and workload optimization, including cabinet-level power management and thermal storage for handling transient loads.

Next-generation platforms such as CyrusOne’s Intelliscale are designed to address AI requirements, supporting high-density compute while delivering the scalability and flexibility needed for advanced power and cooling solutions.

Power constraints

In addition to the above, we should not neglect additional constraints, including outdated market incentives and regulatory inertia, which could impact the pace at which new capacity can be delivered.

When it comes to market incentives, investment in new grid expansion projects is usually backed by the government, which may not have the motivation to agree to such large speculative growth. As a result, this increases our need to develop our own power generation or collaborate with local power generators to purchase energy from behind the meter. Having said that, this is not cost-efficient and can utilize carbon-intensive fuel, including natural gas. It’s therefore essential for the data center to connect to the grid to ensure it provides a reduced carbon content of energy at a lower cost.

The small modular reactors possibility

SMRs could be used to bridge the growing gap in the sector’s energy needs. Such a form of energy will also help efficiently deliver digital services, AI, and other advanced workloads.

SMRs provide emission-free power and create new energy generation capacity local to demand, which minimizes pressure on the constrained transmission.

Even though SMR technology is yet to be proven at scale, it does appear that especially in the context of powering large workloads, they provide the best solution. This is the critical window in which we need to address carbon emissions if we are to have any hope of sticking to staying below 1.5°C warming by 2030.

However, nuclear energy projects have historically been delayed and difficult to get off the ground. So, it is welcome that in May 2026, the King’s Speech outlined how the UK government would clear the way for SMRs to be constructed. The government’s new legislative program will implement the recommendations of the independent review of nuclear regulations with a new Nuclear Regulation Bill. This will help streamline the siting and building of new SMRs to power local communities and industries like data centers.

Even with the potential reform of the regulatory regime, we don’t expect SMRs to go operational before the mid-2030s. While major manufacturers like Rolls Royce are determined to develop SMRs, the technology still needs to be fully tested, and its deployment also depends on the transmission upgrades that would plug SMRs into the grid.

As a result, alternative sustainable energy sources play a critical role in our energy strategy. Innovations including advanced cooling systems, ultra-high-density designs tailored for AI workloads, and smarter energy-management strategies are vital in helping data centers and their sustainability journey until SMRs become a practical and viable alternative.

The importance of collaboration

Working together with utility providers and power generators is critical in speeding up delivery. It’s also important to ensure there is greater transparency around power usage and more robust coordinated planning to help dispel any misconceptions about the industry.

For example, in Fort Worth, Texas, we are co-siting data center infrastructure with the power infrastructure of a grid-scale battery energy storage system (BESS). This allows for a faster grid connection. By using existing high-voltage transmission infrastructure and substation capacity, including a 100MW BESS adjacent to DFW7, together with renewable energy and energy storage leaders Eolian, we have accelerated time-to-market for this strategic site.

Some other collaborations worth mentioning include our 190MW agreement with Calpine to secure power, grid connection, and land for our DFW10 campus in Bosque County, Texas, our Preferred Partnership Agreement with E.ON in Europe, and our joint venture with Japanese electric utility and power utility Kansai Electric Power Company, Inc. (KEPCO). These examples demonstrate how global partnerships can enhance resilience alongside the broader power grid while helping to reduce pressure on it.

The road ahead

The reality is that some markets will continue to face barriers in securing grid access. In the US, there is concentrated demand, energy costs, and power availability, which make for a more advantageous landscape. But Europe is starting to catch up as a result of sovereign digital infrastructure priorities, mature enterprise demand, and improved energy frameworks.

While power constraints remain challenging, it’s important to uphold a power-first mindset as well as act responsibly to support our digital society. Through collaboration, innovative technologies and sustainable infrastructure at scale, and the right capabilities, we can drive long-term resilience, reliability, and innovation in the data center industry.