As AI technologies continue to advance, the demand for data centers is skyrocketing and the need for power to keep them running is also skyrocketing. According to a recent McKinsey article, the power needs of data centers are expected to grow to about 2.5 times higher than current capacity by the end of the decade. This surge is driven by the increasing adoption of digitalization and AI, which are transforming industries across the globe.
At TSS, Inc., we understand the critical role that data centers play in this digital transformation. However, meeting the power demands of these data centers presents significant challenges for the entire supply chain. From sourcing reliable power to ensuring the sustainability of power sources, every aspect of the supply chain must adapt to support this growth.
McKinsey highlights four key challenges for the industry.
The first is “Power Infrastructure.” By 2030 they believe there will be need for more than 50 gigawatts of additional data center capacity in the U.S. alone meaning there needs to be a substantial investment in power infrastructure. This includes upgrading existing facilities and building new ones to meet the growing demand. While the demand is most acute near the data center locations, vendors of the technology, integrators, and other providers throughout the supply chain will also need additional power to build, integrate, and test the equipment.
As data centers consume more power, the focus on sustainable energy sources becomes paramount. Integrating renewable energy into the power mix is essential to reduce the environmental impact. While some forms of renewable energy are not yet reliable enough to ensure the continuous operations of data centers, they can and will be valuable in the supply chain. More localized solar on top of production warehouses, small wind electric generation systems which can also fit on roof-tops or fields near facilities can help fill the gap, but we have a need for more innovation and cost-effective creative solutions.
Another challenge is the lead times for electrical equipment and the availability of skilled electrical trade workers to deploy and service the equipment. For instance, earlier this year some of the Tier 4 Generation suppliers were reporting 2-to-4-year lead times to deliver units requiring long-term planning and preparation. Ensuring a resilient supply chain that can handle these demands and continuing education of the workforce is crucial for the timely delivery of data center projects.
At TSS, Inc., we sit at the intersection of demand for AI and the vendors who deliver the technology to make it a reality. We are committed to providing comprehensive solutions that address these challenges to help our vendor partners deliver on the need and demand. Our expertise in data center technology integration and deployment ensures that we can support our clients in navigating the complexities of the data center supply chain.
The need and demand for data centers is not going to subside. Meeting that demand requires a concerted effort from all stakeholders in the supply chain and the policy-makers approving new energy resources. Together we can build a resilient supply chain, we can meet the power demands of AI and drive the next wave of digital transformation.