A new industry report indicates that the emerging market data center pipeline has doubled to match current global operational capacity, signaling rapid geographic expansion.

Emerging markets could emerge as the next major growth engine for the global data centre industry, with planned developments totaling nearly twice the size of current worldwide operating capacity, according to a new report.

S&P Global Ratings notes that growing opposition to data centre construction in developed economies is pushing operators to pursue expansion opportunities elsewhere, potentially channeling substantial investment into digital infrastructure across emerging markets. However, these benefits are unlikely to be distributed evenly. The scale of investment and pace of development will hinge on government policy, natural resource availability, and supporting infrastructure.

Furthermore, S&P expects the conversion rate of planned projects into operational facilities to vary significantly by region, favouring countries with reliable electricity grids, transparent permitting systems, access to renewable energy, and adequate capital. The report identifies energy and water availability as the sector’s primary risks. In rapidly expanding data centre hubs, growth is increasingly colliding with power grid bottlenecks and water stress. Developers may also face mounting social opposition if projects are perceived to raise electricity costs, undermine grid reliability, or restrict local access to land and water resources.

In the Asia-Pacific region, rapid expansion in markets such as India is straining power infrastructure, heightening the urgency for renewable energy deployment. Meanwhile, grid reliability concerns may push some operators toward independent power sources that could be less environmentally sustainable. Concurrently, water stress in coastal and industrial zones is expected to accelerate the adoption of water-efficient cooling technologies.

In the Middle East, abundant and relatively low-cost power continues to underpin data centre growth, though acute water scarcity remains a significant hurdle. While expanding solar capacity supports the sector, S&P warns that operators venturing into increasingly arid regions may need to deploy technologies like solar-powered desalination and advanced closed-loop cooling systems to navigate resource constraints.