The surging demand for artificial intelligence is driving major tech companies and their vendors to transform legacy energy plants and industrial sites into data centers, a transformative shift that promises significant returns.
Billions of dollars are being invested by Microsoft, Google, and Amazon in building data centers to fuel their cloud computing and AI ventures, yet finding suitable locations with adequate energy supplies is becoming increasingly challenging?
Many information middle markets are “closely constrained in terms of land availability and energy,” which in flip fueled curiosity in smaller markets and “extra sophisticated websites” akin to outdated energy stations, stated Adam Cookson, head of land transactions for actual property agency Cushman & Wakefield’s Emea information middle advisory group.
There are growing alternatives for homeowners with properties like these, he noted.
According to Daniel Thorpe, information middle analysis lead at real estate group JLL, developers of large-scale data centre campuses are considering locations such as “infrastructure sites or power stations.”
“Typically, hyperscale facilities like those operated by major cloud computing providers, such as Microsoft, Amazon, and Google, would be evaluating influence stations.”
While coal energy stations are being phased out in parts of the US and Europe, they may still possess characteristics that an information hub campus could leverage. Industrial facilities are often deliberately sited to optimize energy efficiency, frequently featuring infrastructure for transmitting power and located near reliable water sources.
Microsoft plans to construct information centers on the sites of former Eggborough and Skelton Grange power stations, located near Leeds in northern England, with construction slated to begin at Eggborough in 2027. Amazon plans to establish a new campus on the site of the former Birchwood energy station in Virginia, USA.
A significant energy transaction in Europe is currently being negotiated, according to a source familiar with the matter.
Electrical energy supply constraints pose a significant threat to the expansion of artificial intelligence, as the sector requires consistent and reliable power sources. Furthermore, other limitations such as insufficient fiber connectivity further restrict the number of viable locations for building a new data center, exacerbating the challenge.
This unconventional approach sparked curiosity, analysts noted. Given the distinct requirements of AI workloads, data centers can now locate themselves in more peripheral areas, distant from primary computing nodes, as latency – the time it takes to transmit data and receive a response – poses less of an issue for training AI models.
Repurposing existing websites can also be a viable option for businesses looking to refresh their online presence without starting from scratch. “Rahul Mewawalla, CEO of Mawson Infrastructure Group, notes that the company is experiencing a surge in interest from private equity firms and other investors looking to collaborate on repurposing business and energy properties into data centers.”
Macquarie Asset Management’s minority-owned Virtus Knowledge Centres has recently acquired two properties: a former solar farm site in Berlin and a historic war-era munitions manufacturing facility in the UK. By 2026, the organization intends to metamorphose its websites into comprehensive hubs of knowledge and information.
Thor Equities Group has recently acquired a former manufacturing plant in Georgia, according to Chairman Joe Sitt. He described the property as being “equipped with transformers, water, sewer, and pure gasoline infrastructure” and highlighted its suitability for data center development.
The recent surge in data centre development echoes the trend of bitcoin miners repurposing obsolete industrial sites, including former aluminium smelters.
Noting concerns that such conversions may be a lengthy, costly, and complex process, some urged caution, suggesting it might not always be prudent if an influence plant had been disconnected from the grid and its impact overlooked by the relevant operator.
According to Mark Dyson, managing director of the carbon-free electrical energy program at Rocky Mountain Institute, “It’s unlikely straightforward for utilities to repeatedly toggle a grid swap on and off.” “In discussions with corporate partners, we’ve encountered these hurdles.”
According to Thorpe from JLL, “The valuation of a potential adaptive reuse project hinges on various factors, including the specific location’s dynamics, its potential worth, land scarcity, and acquisition costs.”
According to a study by the Renewable Energy Institute, it is theoretically possible for renewable energy sources to coexist with existing fossil fuel-based infrastructure, and feed into the grid through the existing network whenever economically feasible.
Excess grid connection services often come with limitations on their capacity to inject power into the system, potentially allowing them to support on-site facilities like data centers.
