Data spending overtakes oil for the first time

The International Energy Agency has reported that global spending on data centres will reach around $580 billion this year, overtaking the $540 billion allocated to new oil supply projects. The agency described this comparison as a clear marker of how modern economies have become anchored in digital services, cloud computing and large scale AI models, all of which require vast physical infrastructure and reliable electricity.

Usage to triple by 2035

Electricity use from data centres is projected to approximately triple by 2035. AI systems are a major driver, and the IEA expects half of all demand growth to take place in the US, with Europe and China accounting for most of the remainder. Many new facilities are located near existing clusters around large cities, with around half of the sites currently in development designed to deliver at least 200 megawatts.

The concentration of this growth is, therefore, already testing the limits of energy systems. Grid connection queues for new facilities continue to lengthen, and in several regions networks are so congested that new requests have been paused. Shortages of transformers, cables and other grid components are adding to delays. These issues highlight how the rise of AI is now tightly linked to national energy planning, rather than being a purely digital challenge.

Electricity systems under growing pressure

The IEA describes the global system as entering an “Age of Electricity”, with most new energy demand coming through power grids rather than fossil fuels. Investment in electricity generation has increased significantly since 2015, yet grid investment has not kept pace. New solar and wind capacity is being deployed at record levels, but the lines and substations needed to carry this electricity to major users are often slowed by planning processes and supply chain constraints.

Cooling demand is creating additional pressure. Rising temperatures and rising incomes in many regions are driving higher peak electricity loads from air conditioning. These peaks often coincide with the load patterns of data centres, electric vehicles and electrified heating. As a result, grids are increasingly stretched while they await new capacity and greater flexibility from storage technologies.

In several established markets, energy regulators have warned that large electricity users may need to be subject to stricter technical rules or new pricing structures to ensure network stability. Data centres are therefore becoming part of broader energy security discussions, particularly in regions where supply margins are tightening.

Power shortages slow construction across EMEA

Power constraints are directly affecting the pace of new construction across Europe, the Middle East and Africa. New research from Savills shows that only around 850 megawatts of new power capacity for data centres has been delivered across the region so far this year, representing an 11% decline compared with the same period last year. New take up has also slowed to approximately 845 megawatts, roughly half of 2024’s level.

This slowdown is not driven by falling demand. In fact, total contracted power capacity has risen to almost 14,500 megawatts, up by 12% year on year. Occupancy rates have increased to 91%, and around a quarter of new take up is now pre let. These figures illustrate that operators are securing power well ahead of time because there is no guarantee that future capacity will be available when needed.

Property advisory firm Savills found that established hubs continued to expand over the past year, including France, Germany, the UK and Ireland. Strong growth was also recorded in emerging markets such as Portugal, Saudi Arabia, Spain, the UAE and Sweden, where land and power availability are more accessible. This trend suggests that some operators are shifting attention to secondary and tertiary locations that offer fewer bottlenecks and more flexible permitting.

The effects of cost inflation

It seems that cost inflation remains a significant factor. Across EMEA, data centre build costs now range between roughly $7.3 million and $13.3 million per megawatt of IT load. It seems that some cities have even experienced double digit annual increases in land prices, labour and equipment. The result is that these rising costs are lengthening project timelines and prompting developers to form closer relationships with suppliers to secure key components earlier.

Electricity consumption forecasts continue to add urgency. One well known industry analysis last year suggested that up to 40% of data centres could face power availability constraints by 2027, and that total electricity consumption for AI optimised servers could reach around 500 terawatt hours. This would represent more than two and a half times the level recorded in 2023.

Superconductors move into data centre design

While grid upgrades are essential, many of the most immediate challenges are emerging inside existing data centre campuses. As AI systems become more computationally intensive, rack level power has risen from tens of kilowatts to around 200 kilowatts in just a few years. Some operators are now planning for 600 kilowatts per rack, and there is growing discussion of multi-megawatt rack architectures.

A US based engineering company, backed by several major technology investors including Microsoft, has now adapted high temperature superconducting cables for use within data centres. The firm’s first commercial system is designed to deliver three megawatts of low voltage power through superconducting cables cooled with liquid nitrogen to approximately -196 degrees Celsius. This cooling allows the material to carry electricity with zero loss, which in turn supports far higher power density.

The company reports that its cables require around 20 times less physical space than equivalent copper cables and can deliver power roughly five times farther within a campus. A demonstration installation has already been completed at a simulated facility, and pilot deployments at live data centres are expected next year ahead of a planned commercial launch in 2027. These technologies do not replace the need for additional grid capacity, but they allow operators to make better use of limited on site power and cooling infrastructure.

Data centres and AI companies

For data centre operators, the expansion in investment highlights both opportunity and risk. Facilities with dependable power connections, competitive energy prices and space for expansion can attract long term demand from cloud providers and AI companies. At the same time, rising construction costs, lengthy permitting and potential regulatory intervention make project planning more complex. There is increasing attention on how much electricity AI infrastructure consumes, which may influence approval processes in some regions.

It seems that AI companies now face equally important considerations. Access to high density, well powered infrastructure directly shapes the pace at which new models can be trained and deployed. Delays in securing suitable hosting capacity can slow research progress or increase operational costs. There is also growing pressure for AI to run on renewable energy, which means the location of data centres and the structure of power contracts matter more than ever.

Governments, economies and businesses

Governments now have to balance national competitiveness with energy security and climate commitments. Data centres underpin cloud services, logistics, digital payments and AI driven innovation, yet they also place significant demands on power networks. This means that policymakers must decide where new facilities can be built, how grid upgrades should be prioritised and how to maintain public support when large projects are proposed near urban areas.

Economically, the sector supports construction, engineering, manufacturing and digital roles. The long term nature of data centre contracts also encourages investment in renewable energy, battery storage and potentially small modular nuclear reactors, which several countries are exploring as a source of stable low carbon power for high demand sites.

For ordinary businesses using cloud and colocation services, the main effects are likely to be reliability, availability and cost. Capacity constraints may lead to higher hosting costs in busy regions, while areas with strong renewable resources and efficient planning may become more attractive for new deployments.

Investors and infrastructure funds increasing

Another relevant trend here is that investors and infrastructure funds continue to increase their exposure to the sector. Since 2021, around 80% to 90% of the value of closed data centre deals has involved private equity, infrastructure funds or real estate investors, compared with half in 2020. This reflects confidence in the long term demand for digital infrastructure but also raises questions about concentration of ownership in assets that underpin national digital resilience.

Challenges and criticisms

The scale of AI related electricity use has raised many questions about environmental sustainability, especially where data centres draw power from grids still reliant on fossil fuels. Concerns have been raised about water consumption for cooling, land use in crowded urban regions and the impact of construction on local communities.

Energy regulators have also highlighted system risks linked to large power users. For example, data centres can influence grid stability if they ramp up unexpectedly or disconnect suddenly, prompting discussions about new standards or pricing structures. There are wider equity concerns too, as global statistics show that hundreds of millions of people still lack basic access to electricity while trillions of dollars flow into advanced digital infrastructure.

What does this mean for your business?

The trends here show a sector that’s expanding rapidly while running up against some clear structural limits. Investment is rising because demand is strong and immediate, yet the electricity needed for large scale AI is difficult to deliver at the pace operators require. This creates a landscape where data centres are becoming essential to economic performance, but their growth is constrained by the slow evolution of energy infrastructure.

Operators now depend far more on securing reliable power than on adding floorspace or equipment. This means that sites with firm grid connections and competitive energy costs will be best placed to meet rising AI demand, while regions with slow planning processes or congested networks risk falling behind. AI companies face similar pressures because training and running advanced models depends on reliable access to powerful, energy intensive processing systems. Delays caused by grid bottlenecks or supply chain issues can slow deployment and raise operating costs.

Governments must now balance digital competitiveness with energy security and climate targets. Data centres support cloud services, logistics, payments and AI innovation, so the ability to host them is becoming a strategic priority. Grid upgrades, renewable investment and more efficient permitting processes will be required if countries want to remain competitive. This matters directly to UK businesses, which rely on stable cloud services and cost effective data processing. Rising pressure on electricity networks could influence the reliability and price of digital services across the economy.

It seems that investors are continuing to increase their involvement because long term demand remains strong, although greater private ownership of strategic infrastructure raises questions about affordability and resilience. Meanwhile, environmental concerns around electricity use, water consumption and land availability remain under close scrutiny. These issues highlight the importance of ensuring that rapid AI and cloud expansion aligns with national climate goals and local community interests.

The overall picture, therefore, appears to be that of a sector that will continue to grow but will be shaped most of all by the availability, cost and cleanliness of electricity. The choices made now on grid investment and energy policy will likely define how quickly AI infrastructure can expand and how the associated benefits are shared across economies and industries.

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A new sustainable building material that’s stronger than steel and made from ordinary timber is about to go into mass production, and it could change the face of construction forever.

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Grabowski

The machine, nicknamed “Grabowski”, is being heralded as the “world’s most powerful worm” for its ability to silently and efficiently burrow through various terrains. Compact, resource efficient, and designed for urban environments, this cutting edge technology promises to address significant challenges in the push for sustainable energy.

What is geothermal energy, and why is it important?

Geothermal energy is a clean, renewable and always available energy source derived from the heat stored beneath the Earth’s surface. While most people associate renewable energy with solar and wind, geothermal energy offers distinct advantages. It’s not weather dependent, it operates 24/7, and it is virtually limitless.

This underutilised resource currently accounts for just one percent of global energy demand. However, the International Energy Agency (IEA) estimates that geothermal energy could actually supply 15 percent of the world’s energy needs by 2050 if advancements like Borobotics’ technology gain traction. The environmental benefits could be immense, particularly for heating and cooling, which together account for 50 percent of global energy consumption, most of which still relies on fossil fuels which pollute and produce cardon dioxide.

Enter Borobotics and Grabowski

Founded in Winterthur, Switzerland in July 2023, Borobotics says it’s on a mission to accelerate the energy transition. The company’s co-founder, Hans-Jörg Dennig, began conceptualising the “bore-robot” back in 2017, with technical refinements brought in by Philipp Ganz and the business expertise of Moritz Pill.

At the core of their innovation is “Grabowski”, an autonomous geothermal drill that is radically smaller and quieter than traditional rigs. Measuring just 2.8 metres long with a diameter of 13.5 centimetres, it is designed to fit into tight spaces, such as back gardens, car parks or even basements. By comparison, conventional drilling rigs are often six metres tall and require significant space and logistical support.

As Pill explains, “Drilling will become possible on properties where it would be unthinkable today — small gardens, parking lots, and potentially even basements.”

Grabowski’s compact design is a game changer, requiring only six to eight square metres of operating space, 84 percent less than traditional rigs, and weighing just 150 kilograms. Once activated, the robot can operate autonomously, thereby reducing labour costs and allowing small teams to manage multiple drilling sites simultaneously. This efficiency could address the growing shortage of skilled heat pump installers, especially in Europe.

How does Grabowski work?

Grabowski employs advanced technology to drill through diverse materials. Equipped with sensors in its head, the robot drill can detect different layers of earth, including water tables, and automatically seal the borehole if it encounters gas or water springs. This ensures safety and reduces the risk of environmental contamination.

The robot’s propulsion system, described as “fluid muscles,” allows it to move smoothly within boreholes, while its unique gearbox and dual engine design enable effective hammering and rotation to break down tough materials, from sand to granite.

Unlike traditional diesel powered drills, Grabowski runs purely on electricity and can plug into a standard power outlet, producing just 288 kilograms of CO2 emissions per borehole: a staggering 86 percent reduction compared to its diesel counterparts. Its noise level of under 60 decibels makes it 94 percent quieter than traditional rigs, ensuring minimal disturbance in residential areas.

Why geothermal energy needs a boost

Geothermal energy has long been overlooked due to the high upfront costs of drilling and installation. Heat pumps, which transfer heat from underground to buildings, are more efficient than gas boilers and can double as air conditioning systems. However, they are often more expensive to install, particularly when combined with the drilling required for geothermal systems.

The European Union is actively promoting heat pump adoption as part of its €300 billion REPowerEU plan. For example, it aims to install 43 million new heat pumps between 2023 and 2030. While air source heat pumps are currently more popular due to their lower costs, geothermal pumps actually offer superior efficiency because they rely on the Earth’s stable subterranean temperatures rather than fluctuating outdoor air.

“In many European countries, at a depth of 250 metres, you have an average temperature of 14 degrees C,” says Pill. “This is ideal for efficient heating in winter, while still being cold enough to cool the building in summer.”

The key to unlocking geothermal energy’s potential lies in reducing costs and making the technology more accessible. Grabowski could therefore represent a significant step towards achieving this goal.

Challenges and competition

Despite its promise, Grabowski does face some limitations. The robot can currently drill to a maximum depth of 500 metres, which is less than the multi-kilometre depths achieved by larger rigs used in utility scale geothermal projects. Its drilling speed is also slower, which could be a drawback in certain scenarios. However, Borobotics is targeting shallow geothermal systems, where these limitations are less of an issue.

It should be noted here that Borobotics certainly isn’t alone in the geothermal tech race. For example, startups like Fervo Energy in the United States and Eavor in Canada are making strides with advanced geothermal systems too. Fervo, backed by Bill Gates’ Breakthrough Energy Ventures, recently partnered with Google to power a data centre with geothermal energy. Meanwhile, Eavor is building a massive underground “radiator” in Germany capable of heating an entire town.

Nonetheless, Borobotics’ focus on small scale, decentralised systems differentiates it from these competitors. By providing an affordable, accessible solution for residential and small commercial properties, Grabowski could carve out a niche market.

What’s next for Grabowski?

Borobotics is currently developing its first working prototype, with plans to begin field testing at an as yet unspecified date in 2025. The company’s CHF 1.3 million (€1.38 million) preseed funding round, led by Copenhagen based Underground Ventures, highlights growing investor confidence in geothermal technology.

As Torsten Kolind, managing partner at Underground Ventures, says, “The potential of geothermal heat pumps to decarbonise Europe is substantial, as long as the cost comes down. The minute that happens, the market is open.”

Borobotics’ approach seems to align perfectly with this vision. By addressing cost, efficiency, and accessibility, the company may be poised to make geothermal energy a viable option for millions of households. If successful, Grabowski could play a pivotal role in reshaping the energy landscape, reducing reliance on fossil fuels, and advancing global sustainability efforts.

What does this mean for your organisation?

Borobotics’ innovation sounds like it could offer a step forward in the quest for more sustainable and cheaper energy solutions. By focusing on affordability, compactness, and accessibility, the company is addressing some of the key barriers that have historically limited the adoption of geothermal energy. With the EU’s ambitious goals to decarbonise heating and cooling, Grabowski could fill a crucial gap in the market, particularly in urban and residential settings where traditional rigs are impractical.

Grabowski’s environmental credentials are also quite impressive. Its reliance on electricity over diesel, combined with its reduced CO2 emissions and quieter operation, make it a gentler option for the planet and its people. The prospect of an autonomous drilling robot that can be set up by a single worker and left to operate independently could significantly streamline geothermal installation processes. This innovation sounds like it may alleviate bottlenecks caused by Europe’s shortage of skilled heat pump installers, potentially accelerating the adoption of geothermal systems.

That said, challenges remain. Grabowski’s maximum drilling depth of 500 metres and slower speed may limit its application in certain contexts, especially in large scale energy projects requiring deeper wells. Also, although Borobotics appears to be well positioned in the growing geothermal market, competitors like Fervo Energy, with some serious backing, and Eavor are pursuing equally innovative solutions, which may overshadow the Swiss startup’s ambitions on a global scale.

The geothermal sector itself must also overcome broader obstacles. While the technology offers immense potential, upfront costs and public awareness remain barriers to widespread adoption. Public and private investment could be crucial in bringing costs down and fostering a shift towards geothermal energy. Borobotics’ ability to deliver on its promises, particularly as it transitions from prototype development to real world deployment, will determine its impact on this evolving landscape.

Borobotics is, therefore, now entering a market primed for change, with a product that seems tailor made to capitalise on the growing demand for sustainable heating and cooling. If the company can navigate the challenges ahead and scale its technology effectively, the Grabowski autonomous drill may well become a vital player in the push to decarbonise energy systems. While the road ahead is far from smooth, the possibilities for a more sustainable future make this an endeavour worth watching closely.

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China In First Place 

The ‘World Energy Investment 2024’ report from the International Energy Agency (IEA), which tracks capital flows in the energy sector, shows that clean energy investments are set to be up by more than 50 percent from 2020.

The report shows that whereas Europe is expected to be spending an estimated $370 billion on clean energy, with the US spending $315 billion (about $970 per person), China is expected to lead in clean energy investment this year with approximately $675 billion (about $2,100 per person): nearly twice as much as the combined investments of Europe and the US!

Investment In What And Why? 

The report shows that the focus of China’s investment is primarily on solar photovoltaic (PV) technology, driven by falling module prices and strong domestic manufacturing capabilities. Solar PV investments alone are projected to exceed $500 billion globally, with China contributing a substantial portion.

Also, China’s investments are being bolstered by rapid growth in three new clean energy industries: solar cells, lithium battery production, and EV manufacturing.

Why are Europe and the US not investing as much? 

The lag in clean energy investment by Europe and the US compared to China highlighted by the report, can be attributed to factors such as:

• Scale and speed. China’s aggressive scaling and rapid deployment of renewable technologies outpace Europe and the US. However, this is partly down to China benefitting from substantial state funding and low manufacturing costs, enabling quicker and more extensive deployment of solar PV and other technologies.
• China’s manufacturing dominance. China’s dominance in manufacturing solar panels, batteries, and EVs at lower costs due to economies of scale and cheaper labour allows it to invest more heavily in these areas. This competitive edge in production costs gives China a significant advantage over the US and Europe.
• Government policies. Chinese government policies provide strong incentives and subsidies for clean energy projects, fostering growth in the sector. In contrast, the US and Europe have more fragmented policies, with varying levels of support across states and countries, which slows investment.
• The cost of capital. Higher financing costs in Europe and the US hinder clean energy investments. In China, favourable financing terms from state owned banks lower the cost of capital, encouraging more investment.
• Infrastructure challenges. Europe and the US face significant challenges in upgrading their grid infrastructure and energy storage systems to support renewable energy. China, however, appears to have been more proactive in modernising its grid infrastructure, facilitating the integration of renewable energy sources.
• Strategic policy. China’s industrial policy focuses heavily on becoming a global leader in clean energy, emphasising both domestic production and export dominance. Europe and the US are still developing comprehensive strategies to match China’s aggressive approach.
• The different regulatory environments. Stricter environmental regulations and longer approval times for new projects in Europe and the US can delay investment and project implementation. In China, regulatory processes are often more streamlined, allowing for faster progress.

Isn’t China the biggest greenhouse gas producing country? 

In short, yes. China is the largest emitter of greenhouse gases in the world. For example, in 2021, China accounted for about 27 percent of global carbon dioxide emissions, making it the single largest contributor to climate change. This is largely due to China’s heavy reliance on coal for energy and its rapid industrialisation and urbanisation over the past few decades. However, as highlighted by the ‘World Energy Investment 2024’ report, there now appears to be a strong commitment by China to transitioning towards cleaner energy sources. Its clean energy investments will be crucial for reducing its carbon footprint and addressing the global climate crisis.

Global disparity 

The ‘World Energy Investment 2024’ report highlights not just the fact that China’s clean energy investment will far outstrip that of that of the US and Europe this year, but also that there is an uneven distribution of clean energy investments globally. For example, other regions, particularly developing economies, struggle to keep pace. Clean energy investment in emerging and developing economies remains low, accounting for only about 15 percent of global spending. High financing costs and lack of supportive policies are major barriers in these regions.

Fossil fuel investment still strong 

Another key point outlined in the report, however, is that investment in fossil fuels remains strong, with upstream oil and gas investments projected to increase by 7 percent in 2024 to $570 billion, following a 9 percent rise in 2023. Coal investments have also been rising, with more than 50 GW of unabated coal fired power generation approved in 2023, predominantly in China. Despite this, clean energy investments are growing faster: for every dollar invested in fossil fuels, nearly two dollars are now directed towards clean energy technologies.

What does this mean for your organisation? 

The disparity in clean energy investment revealed by the IEA’s ‘World Energy Investment 2024’ report carries significant implications for businesses in the UK and across Europe. For new clean energy industries, the rapid advancement and substantial investment seen in China underscores the urgency for Europe and the UK to bolster their efforts. The heavy investment in solar PV, lithium batteries, and EV manufacturing in China sets a high benchmark, illustrating the benefits of aggressive state support and strategic industrial policies.

For UK businesses, this disparity presents both a challenge and an opportunity. The challenge lies in competing with China’s scale and speed of deployment. However, this also opens opportunities for innovation and collaboration in clean energy technologies. UK companies can leverage their expertise in renewable energy and look to form partnerships that tap into global supply chains. Also, businesses can advocate for more robust government policies that provide clear incentives and reduce financing costs, making clean energy projects more viable.

To increase investment in clean energy, Europe and the UK must address several key areas. First, there is a need for comprehensive and cohesive policies that provide consistent support across all regions. This includes streamlining regulatory processes to reduce approval times for new projects and ensuring that environmental regulations are balanced with the need for swift project implementation. Also, improving access to affordable capital through state backed financial incentives or low interest loans could help make a significant difference.

Enhancing infrastructure is another critical area. Upgrading grid infrastructure and expanding energy storage capabilities are essential to support the integration of renewable energy sources. Investments in these areas not only facilitate the transition to clean energy but also create new business opportunities in infrastructure development and maintenance.

Strategic industrial policies that focus on building domestic capabilities while engaging in international cooperation may also help to position Europe and the UK as leaders in the global clean energy market. By fostering innovation and supporting emerging technologies, the UK could develop a competitive edge and create sustainable economic growth.

Addressing these challenges, therefore, through targeted investments and supportive policies will not only help the UK and Europe catch up with China’s clean energy spending but also drive long term benefits for businesses. Increased clean energy investment will enhance energy security, create jobs, and help position the UK as a key player in the global transition to sustainable energy.

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A report from the International Energy Agency (IEA) forecasts that almost a third of electricity demand in Ireland is expected to come from data centres by 2026. 

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