Data centres: why water and power are changing the game
Updated: 1 day ago
Driven by AI and the cloud, European data centres are among the most dynamic segments of infrastructure. But their growth now runs into two resources. Here is our take on the analysis published by Access Capital Partners, co-manager of Otentiq Private Infrastructure III.
Demand is soaring
Artificial intelligence, cloud computing and Europe's push for digital sovereignty are driving data centre construction. Europe still relies on foreign players for over 80% of its digital infrastructure, and the European Union has announced more than €100bn of commitments to the sector. Data centres are on track to become one of the continent's largest energy consumers.
Power, the visible bottleneck
Electricity demand from European data centres is expected to rise from 96 TWh in 2024 to 236 TWh by 2035. In the main hubs, grid connection queues keep getting longer. Efficiency gains are real: PUE, the ratio of total energy consumed to the energy used by servers, has fallen from around 2.0 to 1.5 in ten years. It will not be enough to absorb the growth.
And since electricity accounts for 40 to 60% of operating costs, its availability and price sit at the heart of profitability.
Water, the overlooked constraint
Cooling relies heavily on freshwater. A 1 MW facility can use up to 25.5 million litres of water a year. By the 2050s, around 45% of facilities could face high water stress. Yet this risk remains less regulated and less disclosed than energy risk.
Location matters again
Access assesses every site against four local criteria:
Grid access, for a reliable, timely and scalable connection.
Low-carbon power, through power purchase agreements (PPAs), on-site generation or storage.
Electricity prices, with a predictable, long-term cost base.
Water and cooling, limiting freshwater dependency and favouring reuse.
On top of that come three local risks: tighter permitting, the obsolescence of older sites in the face of AI workloads, and growing local opposition.
A real-world example, underground in Norway
Access's latest co-investment is an underground data centre in Norway, built inside a former olivine mine. No air conditioning needed: the fjord water does the cooling.
What it means for investors
The sector is entering a more selective phase. Exposure to the trend is no longer enough. Value will go to assets that anticipated energy and water constraints: secured low-carbon power, efficient cooling and long-term tenant contracts.
Adjacent infrastructure benefits too: renewables, grids, water treatment and recycling, and fibre.
Source: Access Capital Partners, "Data Centre Investment Case: Access' views on Power and Water constraints", September 2026. This article is for information purposes only and does not constitute investment advice. Past performance is not indicative of future results. Investing in unlisted assets carries a risk of capital loss and a liquidity risk.