Data Center Infrastructure: Seizing Growth in AI-Driven Markets Amid Power Constraints

The global data center industry is at a pivotal juncture, driven by the explosive growth of artificial intelligence (AI), cloud computing, and hyperscale workloads. This demand is straining traditional hubs like Northern Virginia, creating opportunities for developers and investors to capitalize on emerging markets and cutting-edge technologies. In this article, we explore how strategic investments in AI-ready facilities, liquid cooling innovations, and alternative energy partnerships are unlocking high-margin growth—especially in secondary markets such as Richmond, Virginia, and Johor, Malaysia, where scalable power and regulatory tailwinds position them as lower-risk, high-return alternatives to saturated markets.

The Demand Surge: AI's Appetite for Power

The AI revolution is fueling unprecedented demand for data center capacity. Hyperscalers like Google, Amazon, and Microsoft are racing to expand infrastructure to support large language models (LLMs) and generative AI systems, which require massive compute power. By 2025, AI workloads are projected to consume 14% of global data center energy, up from 3% in 2020, according to GreenTech Media. This shift is pushing data center operators to adopt advanced cooling systems and renewable energy partnerships to manage costs and meet sustainability goals.

The Challenge: Power Constraints in Saturated Markets

Northern Virginia, the world's largest data center market, faces severe power capacity limitations. As of Q1 2025, its inventory grew to 3,046.1 MW, but power shortages have delayed projects, with some developments pushed to 2028. Dominion Energy's planned 2026 transmission upgrades offer relief, but the region's 0.76% vacancy rate underscores its saturation. Land scarcity and rising costs—$50 million+ per acre in Loudoun County—are further deterring developers. This bottleneck has created a “land rush” for secondary markets with scalable power and lower barriers to entry.

The Solution: Liquid Cooling and Green Partnerships

To address power and cooling challenges, developers are adopting liquid cooling technologies, which reduce energy use by 30–50% compared to traditional air cooling. Companies like Asetek and CoolIT Systems are partnering with data center builders to deploy these solutions, enabling denser server deployments and lower operational costs. Meanwhile, alternative energy partnerships are critical to reducing reliance on fossil fuels. For instance:

• AirTrunk's JHB2 data center in Johor (Malaysia) uses advanced liquid cooling and a Virtual Power Purchase Agreement (VPPA) for 30 MW of renewable energy, achieving a PUE of 1.25.
• PDG's JH1 campus in Johor collaborates with Tenaga Nasional Berhad (TNB) for accelerated power delivery, while Equinix secures 100% renewable energy for its KL1/JH1 facilities.

Secondary Markets: The New Frontier for Growth

While Northern Virginia's saturation poses risks, secondary markets like Richmond, Virginia, and Johor are emerging as high-growth, lower-risk hubs:

Richmond, VA: Scalable Power and Proximity to Fiber

• Infrastructure: Richmond hosts 53 data centers (second in Virginia) and offers scalable power via Dominion Energy's 3,500 MW capacity. Projects like the 700-acre Tract development in Chesterfield County aim to add 11 new facilities, leveraging proximity to transatlantic cables and fiber networks.
• Regulatory Advantage: Virginia's designation of data centers as critical infrastructure accelerates permitting, contrasting with Northern Virginia's zoning delays. Richmond's vacancy rate (not disclosed but implied higher than 0.76%) offers developers flexibility.
• Investment Play: Focus on CyrusOne and Digital Realty, which are expanding in Richmond with build-to-suit AI facilities.

Johor, Malaysia: The SEZ Advantage

• Tax Incentives: The Johor-Singapore Special Economic Zone (JS-SEZ) offers a 5% corporate tax rate for qualifying companies and 15% income tax for knowledge workers, attracting investments from Equinix, Microsoft, and GDS Holdings.
• Power and Growth: Johor aims to reach 5 GW of data center capacity by 2035, supported by Malaysia's National Energy Transition Roadmap (NETR). While energy sustainability risks exist (95% fossil fuel reliance in 2022), partnerships like AirTrunk's TNB collaboration demonstrate progress.
• Investment Play: Back PDG (Princeton Digital Group) and AirTrunk, which are securing prime sites in Johor's Sedenak and Nusajaya Tech Parks.

Risks and Mitigation Strategies

• Regulatory Hurdles: Richmond's zoning battles and Johor's environmental concerns (water scarcity, power outages) require diligence. Investors should prioritize firms with strong local partnerships and ESG commitments.
• Supply Chain Volatility: Monitor geopolitical risks, such as U.S.-China trade tensions, which could disrupt semiconductor availability for AI hardware.
• Mitigation: Diversify portfolios across regions (e.g., Richmond for North America, Johor for Asia) and favor companies with hybrid cooling and renewable energy strategies.

Investment Recommendations

1. Developers with Scalable Power Solutions:
2. PDG (NASDAQ: PDG): Expanding in Johor and Richmond with 50+ projects under Malaysia's JS-SEZ.
3. AirTrunk (ASX: AKT): Leading in Southeast Asia with AI-ready facilities and green partnerships.
4. Colocation Providers with Build-to-Suit Capabilities:
5. CyrusOne (NASDAQ: CONE): Focused on hyperscale AI deployments in Richmond and Dallas.
6. Equinix (NASDAQ: EQIX): Leveraging its global footprint and 100% renewable energy targets.
7. Utilities with Renewable Integration:
8. Dominion Energy (NYSE: D): Key player in Richmond's power infrastructure, advancing solar and offshore wind projects.

Conclusion: Act Now on the AI Infrastructure Boom

The data center industry's shift toward AI-ready facilities and secondary markets presents a rare confluence of demand, innovation, and regulatory tailwinds. Investors should prioritize firms with scalable power solutions, liquid cooling expertise, and strategic positions in markets like Richmond and Johor. With hyperscale adoption accelerating and power constraints in legacy hubs worsening, the time to act is now. The next wave of growth will reward those who align with the future of AI-driven infrastructure.