Navigating the AI Infrastructure boom – Data centres, energy demand and the environment

The New Frontier: Global Expansion and Unforeseen Risks

The sheer computational power demanded by AI is creating an unparalleled surge in energy consumption from data centres at its core, with their energy consumption projected to more than double by 2030, with some forecasts suggesting AI could account for up to 10% of all global electricity consumption by that time. This rapid expansion drives a critical need for new infrastructure, often in jurisdictions where organisations have limited prior experience, as well as putting a strain on net-zero commitments.

This new environment presents significant challenges:

• The Infrastructure Bottleneck and Third-Party Reliance: While data centres can be constructed relatively quickly (18-24 months), connecting them to power grids can take considerably longer – reportedly 4-7 years in parts of the US, and up to a decade for new transmission lines. Globally, approximately 20% of planned data centre projects face delays due to connection queues and permitting issues. Navigating these areas requires deep corporate intelligence skill sets into local regulatory frameworks, grid operator capabilities, and the reliability of third-party infrastructure providers. Without this insight, project timelines and financial viability can be put at risk.
• ESG Dilemmas and Reputational Risk: The immense pressure to provide energy for AI is, in some regions, leading to the reactivation of retired coal plants, directly undermining climate goals and net-zero commitments, and leading to an ESG dilemma and the likelihood that technological advancement inadvertently increases carbon emissions. Studies indicate that data centres often have a higher carbon intensity due to their location in areas with 'dirtier' electrical grids, while the substantial water footprint of data centres – requiring up to two litres of water per kilowatt-hour for cooling – strains local water supplies, particularly in arid regions. Organisations expanding or currently looking to grow in these areas should conduct thorough ESG due diligence on potential sites as well as wider due diligence on partners to mitigate their environmental impact and safeguard their reputation.
• Operational Complexities and geopolitical understanding – the challenge faced by Ireland: Since the 1980s Ireland has had great success in attracting investment by tech giants, offering an English-speaking nation within the EU with favourable tax policies. However, in recent years this investment has begun to create a national energy challenge: in 2023 data centres were already consuming 20% of the nation’s energy, and this is expected to approach 30% by 2030. The grid is so strained that a moratorium on new data centre connections was imposed across the Dublin area, and some new facilities are being forced to connect to natural gas networks instead. This situation highlights a critical disconnect where national climate plans can be compromised by the rush to expand rapidly and meet demand, and creates significant risks that companies will not meet their environmental commitments. Understanding where and how you will set up a data centre (and the geopolitics of such decisions) will no doubt be more and more pivotal in decision making processes. 
  

The Path Forward: The opportunities involve a Strategic and Integrated approach 

The AI boom and the opportunities connected to it will involve a strategic and joined-up approach from organisations operating in distinct areas but coming together for a common goal, below we briefly look at three sectors and the potential investment/ benefits in this area:

• Real Estate Investors: Beyond connectivity, the focus for AI and its data centres must now include sustainable and resilient power and water sources, with the potential to see investment in colder climates (which may also feel like lower risk jurisdictions) to reduce overall cooling demands, meaning that for real estate investors the criteria for viable data centre locations have permanently shifted. This requires a view from corporate intelligence professionals who can provide information and analysis on local resource availability, regulatory stability and risks connected to jurisdictions that often don’t fall in the ‘high risk’ emerging market category.
• Energy Sector: The urgent imperative to accelerate renewable generation transmission infrastructure development in new territories introduces a complex web of risks that demands meticulous attention. From a risk perspective, organisations face significant challenges including navigating highly diverse and often volatile regulatory and political landscapes, ensuring robust third-party due diligence for strategic partnerships, and mitigating operational and reputational risks associated with local representation. Deloitte is uniquely positioned to assist clients in the energy sector by ensuring rigorous due diligence processes are in place to manage financial, operational and reputational risks associated with third parties. This includes designing robust third-party risk management frameworks and implementing continuous monitoring solutions.
• Technology sector: While a powerful engine for innovation and growth, the technology sector  faces an increasingly complex array of risks stemming from its environmental footprint, social impact, and governance practices. Proactive integration of ESG considerations into expansion and investment strategies is no longer merely best practice but a critical risk mitigation and value creation imperative. Developing robust frameworks for ethical AI governance, ensuring data privacy compliance across diverse jurisdictions, and assessing and enhancing supply chain sustainability are all ESG aspects Deloitte can help embed into core business strategy, from product development to market expansion, ensuring long-term resilience and regulatory adherence.

The future of AI hinges not just on smarter algorithms, but on smarter, more sustainable infrastructure, underpinned by intelligent risk management and a deep understanding of the environments in which it operates.

How Deloitte Can Help

As businesses navigate this complex landscape, expanding through new relationships and into unfamiliar jurisdictions, they are exposed to novel risks that can be easily overlooked in the rush to meet critical demands. Immediate commercial decisions, if not properly vetted, can compromise compliance and long-term operational sustainability.

Deloitte is uniquely positioned to support clients in this critical phase:

• Corporate Intelligence Services: We provide bespoke intelligence gathering on specific industries and geographies. This includes in-depth market entry analysis to help clients understand the business, political, and regulatory environments they will be entering, including identifying potential risks and opportunities. Our insights enable informed decision-making, ensuring strategic alignment with local conditions.
• Third-Party Risk Management: We assist clients in understanding the operational, integrity, and wider risks associated with new partners and suppliers globally. We offer comprehensive services that can assess the financial stability, operational capabilities, compliance records, and ethical standing of investors, partners and suppliers – through both ad-hoc support and ongoing technology-based solutions. This proactive approach helps clients to mitigate risks relating to supply chain disruptions, regulatory non-compliance, and reputational damage.
• ESG Advisory: We support organisations in embedding ESG considerations into their expansion strategies. This includes assessing the environmental impact of proposed data centre locations (such as the carbon intensity of local grids, or water scarcity), advising on sustainable energy and cooling solutions, and ensuring compliance with evolving environmental regulations and net-zero commitments. Our expertise helps clients build resilient and responsible operations that meet stakeholder expectations.

By leveraging Deloitte's expertise in corporate intelligence, third-party risk management, and ESG advisory, businesses can confidently expand their AI infrastructure, ensuring that their growth is not only rapid but also sustainable, compliant, and resilient.

For more information on how Deloitte can support you please contact Jorge Rivera, Rick Dickerson and Andre Faria  in our Corporate Intelligence Services team.