Why Developers Are Chasing Cheap Power Markets for Data Center Builds

Power is the New Battleground in Data Center Development 

In 2025, the data center industry finds itself at a crossroads where power availability has overtaken all other factors in determining the viability of a new development. For decades, decisions revolved around proximity to urban hubs, access to fiber networks, and tax incentives. Today, however, the conversation has fundamentally shifted. Skyrocketing energy prices, coupled with global power shortages and grid instability, have made low-cost, renewable power the most valuable commodity in digital infrastructure development. 

Developers are scouring the globe for untapped energy markets—regions where clean, affordable, and scalable electricity can fuel the next wave of hyperscale, AI, and edge data centers. Locations that were once overlooked due to geographic isolation or underdeveloped connectivity are now emerging as the future hubs of compute infrastructure. From the hydropower-rich fjords of Scandinavia to the sun-drenched plains of Texas and the geothermal hotbeds of Southeast Asia, power pricing is redrawing the data center map. 

As AI models demand exponentially larger compute clusters and 24/7 operation, cheap, reliable energy has become not just a competitive edge—it’s a survival imperative. Data center developers who fail to secure affordable power risk being priced out of the AI economy altogether. 

The Global Hunt for Affordable, Reliable Power 

Renewable Energy Hotspots 

Developers are prioritizing regions where abundant renewable resources translate to long-term, stable, and low-cost power: 

• Sweden and Norway: Leveraging legacy hydropower infrastructure, these nations offer among the lowest carbon footprints in the world, coupled with stable pricing and robust transmission networks. 
• West Texas and Oklahoma: These deregulated energy markets are home to some of the largest wind and solar farms in North America, allowing developers to pair data centers with onsite renewable generation. 
• Chile and Iceland: Countries with vast geothermal resources provide predictable, carbon-neutral baseload energy that operates independently of seasonal fluctuations. 

Emerging Markets with Untapped Potential 

Beyond traditional data center hubs, several emerging markets are unlocking new possibilities: 

• Northern Africa: Morocco and Egypt are developing solar mega-projects and investing in transmission capacity to power regional and international data centers. 
• Southeast Asia: Indonesia, Malaysia, and Vietnam are rapidly expanding their hydroelectric and geothermal portfolios, providing alternatives to power-constrained Singapore. 
• Central Asia: Kazakhstan and Uzbekistan are leveraging legacy Soviet-era grids and energy surpluses to attract AI, blockchain, and HPC deployments. 

Why Power Economics Are Now Mission-Critical 

AI Workloads Redefine Energy Demand 

The scale of AI compute is unprecedented. Training a single foundation model like GPT or Claude requires tens of gigawatt-hours of energy over several weeks or months. This makes energy costs the single largest expense in AI-focused data centers, surpassing traditional costs for land, construction, and networking. 

Hyperscalers deploying thousands of GPUs per facility cannot sustain operations in high-cost energy markets without jeopardizing margins. Thus, site selection increasingly revolves around securing the lowest cost per kilowatt-hour for sustained, high-density compute workloads. 

Volatile Energy Markets Threaten Profitability 

Tier 1 markets like Northern Virginia, Frankfurt, and London are struggling with: 

• Unpredictable power supply due to aging grid infrastructure. 
• Rising wholesale electricity rates driven by global energy transitions. 
• Carbon taxes and emissions compliance penalties that increase total cost of ownership. 

Developers who strategically build in low-cost power markets can offset these risks and lock in competitive operating costs for the long term. 

Strategic Shifts in Site Selection 

Power-First, Location-Second 

The mantra of data center site selection has flipped. Proximity to urban areas or fiber hubs has taken a backseat to power pricing and availability. 

• Developers are choosing sites where guaranteed grid access and renewable energy pipelines are in place—even if it means building hundreds of miles from major metros. 
• Hyperscalers are recalibrating latency tolerances, accepting longer fiber routes in exchange for sustainable power savings and carbon neutrality. 

Pre-Negotiated Energy Deals 

Leading developers are proactively securing energy before breaking ground: 

• Signing 10- to 20-year power purchase agreements (PPAs) with renewable energy producers to lock in favorable rates. 
• Investing in onsite solar, wind, and battery storage systems to create microgrids and insulate operations from external market volatility. 

Challenges of Building in Emerging Power Markets 

Infrastructure Readiness 

Cheap power markets often lag in other critical infrastructure: 

• Fiber connectivity may be sparse, requiring expensive long-haul builds. 
• Local permitting processes and workforce development may not be optimized for hyperscale data center projects. 
• Emergency power, water availability for cooling, and logistics infrastructure can add complexity and cost. 

Political and Regulatory Risk 

Emerging markets bring regulatory uncertainty: 

• Sudden shifts in energy policy or tariffs can undermine long-term power cost projections. 
• Export controls, taxes on digital services, or nationalization of energy assets present geopolitical risks. 
• Currency volatility may impact the financial viability of projects denominated in local currencies. 

 Cheap Power Will Define the Next Data Center Frontier 

In the race to build the digital infrastructure of the future, power is the defining battleground. Compute demand is growing exponentially, and grid expansion is not keeping pace. Developers that align their strategies with low-cost, renewable power markets will control the next generation of hyperscale and AI infrastructure. 

The future of hyperscale data centers isn’t about where the users are—it’s about where the cheapest, cleanest, and most scalable energy is. Those who build where the power is will dominate the next decade of the cloud economy.