Data Centres Face Climate Catastrophe, Researchers Warn of Looming Disaster

As infrastructure expands worldwide, data centres are confronting a new threat, with many facilities situated in areas facing heightened extreme weather risks. A study by First Street, which examined 97 global data centre markets, found that 79% of capacity is located in regions with increased exposure to hazards such as flooding, extreme wind, and wildfires. These risks are expected to cause operational disruptions, increase downtime, and raise repair and insurance costs.

“Most real asset underwriting still relies on historical data, but the climate is no longer behaving as those historical records would predict,” said First Street CEO Matthew Eby. Furthermore, over half of the world’s data centres are in markets exposed to chronic climate stresses like extreme heat and drought, challenges that affect energy efficiency and drive up expenses.

First Street’s chief economist, Jeremy Porter, also criticised outdated government approaches to data centre development, noting that authorities still calculate risk based on historical rainfall levels without accounting for the impacts of climate change. Current global warming means clouds hold more water vapour, leading to heavier rainfall. Consequently, investors relying solely on traditional metrics to develop data centres are failing to consider how climate could affect long-term operations, given that these facilities typically operate for 20 to 30 years.

Some developers and operators are beginning to design data centres with current climate realities in mind. Digital Realty, for instance, ensures it has sufficient water for cooling its buildings. “Almost all of our data centres now, 300 around the world, use water-free or closed-loop water systems, so there is essentially no evaporation. We invested and chose to do it that way,” said Digital Realty CEO Andrew Power.