Extract E: The economic footprint of data center expansion

Why are we constructing so many hyperscale data centers? Is it to accelerate artificial intelligence and digital services? Or is there limited evidence that they offer net social benefits when accounting for their extensive external impacts?

The cost of establishing a single modern data center has been estimated to be around £150 million, in addition to the continuous operational costs of electricity grid connection and cooling infrastructure before hardware upgrades are required.

Supporters of digital infrastructure growth argue that the productivity gains, cloud services, and technological innovation arising from these facilities fully justify their high private costs. Furthermore, they claim that automated systems can optimize energy use across the wider economy. Viewed this way, some economists argue that digital network infrastructure behaves like a merit good.

However, environmental analysis groups dispute these claims. They point out that a standard facility consumes more electricity than thousands of homes. The external cost generated by these data centers is substantial, estimated up to £2 400 000 annually per site in local environmental damage. This figure includes the costs of regional grid strain, carbon offset requirements, local water depletion for cooling processes, and electronic waste management.