The artificial intelligence (AI) data center boom is being threatened by limited power availability and supply chain capacity, according to a recent report by Turner & Townsend (T&T).

Power is not a new problem in the sector, with 92 percent of respondents in a survey led by T&T stating power availability is more important than location when considering investment.

More pressingly, energy consumption and efficiency are top concerns for 68.4 percent of organizations surveyed.

Tokyo ranks as most expensive, Singapore in close second

With global demand outpacing the availability of power, labor, and capacity, prices in markets are being driven up.

T&T’s survey found that 57 percent of respondents said costs had increased by five to 15 percent.

For the second year in a row, Tokyo has ranked as the most expensive market, sitting at $14.30 per watt. Labor shortages have impacted data center growth in the city and new legislation concerning overtime has placed a strain on delivery.

Singapore comes in second at $13.80 per watt, with power constraints ranking as the country’s biggest concern.

Zurich, Silicon Valley, and New Jersey all follow in close succession. Lagos ranks sixth and, whilst Nigeria is not necessarily strained for power or space, labor and material costs continue to drive up the cost of investment.

In Scandinavia, the data center pipeline continues to look promising. However, high dependency on an international supply chain and imported talent is beginning to take its toll with severe cost implications. In addition, competition for supply chain expertise is set to mount as data center developers compete with incoming hyperscalers for resources.

The report said the UK will be a market to watch, with London coming in at 10th place, particularly following the government’s decision to class data centers as critical national infrastructure.

Lisa Duignan, data centers sector lead at Turner & Townsend, said: “Data centers are increasingly seen by governments as critical national infrastructure, and there is clearly a huge opportunity for clients – but growing challenges, not least power supply, and labor shortages, need to be managed.”