The Data Centre Bottleneck Crisis: How Sustainability Can Help (And Why It's Coming for All Industrial Real Estate)
Data centres are critical infrastructure for the AI economy. But their expansion is hitting hard limits, not from technology or capital, but from power and community opposition.
Bottlenecks are strangling the industry. $64 billion in US data centre projects have been delayed or blocked due to community pushback over power and water use.
This is another example about sustainability becoming a commercial imperative impacting capital deployment risk and stranded assets.
The Primary Bottleneck: Power
Securing a power connection is the number one constraint on data centre expansion. This is existential: no power means no project, regardless of how much capital you've deployed.
In West London, new homes may be banned until 2035 because the grid can't handle both housing electrification and power-hungry data centres. Some developers are now offering "demand flexibility" (agreeing to stop taking power during peak times) just to jump the connection queue.
Any solution that speeds access to power will see adoption, sustainability credentials or not.
The Secondary Bottleneck: Community Opposition
That $64 billion in blocked projects isn't traditional NIMBYism. Communities are citing legitimate concerns: grid capacity, water depletion (large data centres consume as much water as a town of 10,000-50,000 people), and resource competition with housing and industry. This creates regulatory risk as governments respond to voter pressure.
How Bottlenecks Feed Each Other
These constraints create a negative feedback loop:
Power scarcity drives aggressive competition for connections
Aggressive expansion triggers community concerns about resources
Community opposition blocks projects, keeping power scarce
Result: capital deployed but unable to break ground
Beyond Data Centres: The Coming Industrial Real Estate Crisis
This is not just a data centre problem. As electrification accelerates across the economy, any industrial real estate without adequate power capacity risks becoming a stranded asset.
Manufacturing facilities transitioning to electric processes, logistics hubs installing EV charging infrastructure, warehouses adding automation all are hitting the same power constraints. A "shed with decent power" is becoming a differentiator.
Industrial landlords who can't offer substantial power capacity will find tenants looking elsewhere. Those who secure power connections early, or better yet, develop on-site generation, will command premium rents. The data centre crisis is a preview of what's coming for the broader industrial sector.
Sustainable Solutions as Bottleneck-Breakers
A quality sustainability expert within your organisation should help you to solve commercial challenges using solutions that have additional environmental and societal benefits.
On-site solar and batteries help by reducing grid dependence, but they're unlikely to be sufficient alone. The real solution may be direct contracts with power suppliers or developing dedicated generation projects. These arrangements bypass the grid queue entirely and provide the certainty developers need.
Liquid cooling reduces water use by 30-45%, directly addressing community concerns that block projects.
Heat reuse transforms waste heat into a community benefit through district heating systems. Opposition turns into support when your data centre heats local homes and businesses.
Demand response software allows facilities to offer grid flexibility, making utilities more willing to approve connections.
Technologies that align sustainability with commercial priorities (speed to power, cost reduction, community relations) will scale. Those offering only environmental benefits will struggle.
The Window is Now
Data centre demand isn't slowing. AI is ensuring continued expansion, and electrification is pulling the rest of industrial real estate into the same power crunch. Bottlenecks are getting worse, not better.
Investors and operators who understand how sustainability solves commercial problems (not just environmental ones) will capture alpha. Those waiting for bottlenecks to clear themselves risk holding stranded assets in a power-constrained world.
The question isn't whether your industrial assets have power. It's whether they have enough power for an electrified future. Increasingly, the answer depends on embracing the sustainable solutions that break today's bottlenecks.
If you're navigating infrastructure decisions in data centres or industrial real estate and need expertise on how sustainability creates commercial advantage, reach out.
Source: This article draws on insights from "Investable Green Data Centres: Where Sustainability Drives Performance" (September 2025), a whitepaper developed by Systemiq in partnership with General Atlantic (BeyondNetZero and Actis), with contributions from GRESB and SDCL.