The AI boom is colliding with a new threat: severe weather

As Europe grapples with an unprecedented heatwave, the tech industry is confronting serious threats to the performance of AI data centers. The soaring temperatures highlight how extreme weather can impact critical infrastructure, including factories, nuclear plants, and data facilities. The surge in air conditioning demand during this heat can overload power grids, potentially leading to blackouts that disrupt operations. This issue isn't confined to Europe alone. In the past three years, severe weather has emerged as the primary cause of loss in Zurich's risk portfolio for U.S. data center builders. Patrick McBride, the head of International Construction at Zurich, noted that such events are now responsible for a third of the company's losses. To mitigate risks, many data centers are relocating to suburban and rural areas, where land is more affordable and historical data on severe weather events is often less extensive. A recent analysis by First Street, a climate risk analytics firm, reveals that approximately 79% of global data center capacity is at heightened risk from severe climate hazards, including flooding, wildfires, and extreme winds. These hazards can lead to operational disruptions, increased downtime, and escalating insurance and repair costs. Joe Macejak, U.S. property digital infrastructure leader at Marsh Risk, emphasized the urgency of addressing these climate risks, stating, "It's not a question of 'if' climate risks will affect the digital infrastructure landscape, but rather how the industry will manage these associated risks." Failure to effectively manage climate-related risks could result in higher operational costs and potential shortfalls for businesses, which could jeopardize the investments fueling the AI-driven data center revolution, according to Macejak. Notably, 64% of data center capacity currently under construction is moving away from traditional sites like Northern Virginia to emerging markets, such as West Texas and Wisconsin, which may face their own unique climate challenges. Facilities in these new locations are increasingly susceptible to extreme weather, including tornadoes and severe winds that can damage roofs and cooling systems. McBride pointed to Brazil as an emerging data center market that may face severe heat issues. In Europe, data centers are migrating to regions like the Iberian Peninsula, where temperature increases are also becoming a concern. The impact of extreme heat extends beyond data centers themselves. Mishal Thadani, CEO of AI software platform Rhizome, noted that high temperatures can strain both data center operations and the power grid. Cooling systems account for about 40% of a data center's energy usage, a figure that spikes during heatwaves when demand for electricity surges. Thadani illustrated this issue with an example from Turin, Italy, where a recent heatwave caused significant thermal stress on underground power cables, resulting in frequent blackouts. Major players in the industry, like Microsoft, are adapting to these changing conditions. A spokesperson indicated that Microsoft designs its data centers to function reliably under a variety of environmental conditions, employing site selection and real-time monitoring to mitigate risks associated with extreme weather. Tech giant Nvidia is also innovating, revealing that its new AI servers can operate at higher cooling liquid temperatures, which could significantly reduce energy costs. As the industry continues to evolve, Aaron Lewis, chief commercial officer at Johnson Controls, emphasized the importance of preparing for these climate challenges. The recent trend of clients incorporating a "climate change factor" into their specifications indicates a shift towards designing data centers that can withstand rising temperatures. The rapid pace of technological advancement in the data center sector is expected to facilitate continued operations even in the face of escalating climate conditions.