Emerging markets are on track to become the next major growth engine for the global data centre industry, with planned developments in these regions amounting to nearly twice the size of current worldwide operating capacity, according to a report by S&P Global Ratings. The findings, released on 4 September, signal a significant geographic shift in where digital infrastructure investment is heading.

Why Operators Are Looking Beyond Developed Markets

Growing opposition to data centre construction in developed economies is prompting operators to seek expansion opportunities in emerging markets, the S&P report noted. Communities and regulators in markets such as the United States, the Netherlands, and Ireland have pushed back against large-scale data centre projects, citing concerns over power consumption, water use, and land access. This resistance is effectively redirecting substantial capital toward digital infrastructure in regions with fewer regulatory hurdles — at least for now.

Uneven Distribution of Benefits

S&P cautioned that the benefits of this investment wave are unlikely to be distributed evenly across emerging markets. The scale of capital deployment and the pace at which planned projects become operational facilities will vary significantly by region, favouring countries that can demonstrate reliable electricity grids, transparent permitting systems, access to renewable energy, and adequate capital availability. Nations that fall short on these criteria risk being bypassed despite their apparent cost advantages.

Energy and Water: The Twin Pressure Points

S&P identified energy and water availability as the primary risks confronting the sector in emerging markets. In fast-growing data centre hubs, expansion is increasingly colliding with power grid bottlenecks and water stress. Developers also face the prospect of rising social opposition if projects are perceived to inflate electricity costs, weaken grid reliability, or limit local communities' access to land and water resources.

In the Asia-Pacific region — including India — rapid expansion is placing greater strain on power infrastructure, heightening the urgency of renewable energy deployment. Concerns over grid reliability may, in turn, push some operators toward independent power sources that could be less environmentally friendly, according to the report. Water stress in coastal and industrial zones is also expected to accelerate the adoption of more water-efficient cooling technologies.

Middle East: Cheap Power, Scarce Water

In the Middle East, abundant and relatively low-cost power is supporting data centre growth, but acute water scarcity presents a significant challenge. While expanding solar energy capacity is lending some support to the sector, S&P warned that operators moving into increasingly arid areas may need to adopt technologies such as solar-powered desalination and advanced closed-loop cooling systems to manage resource constraints effectively.

What This Means for India and the Broader Region

India sits at the intersection of these competing forces — a large and growing digital economy, a government keen on attracting data centre investment, but a power grid that is still catching up with demand. The S&P report underscores that the country's ability to fast-track renewable energy capacity and streamline permitting will be decisive in determining how much of this global pipeline actually lands on Indian soil. The next phase of the data centre build-out will be won not just on cost, but on infrastructure credibility.