That’s what this story was like Initially, the Columbia Centre issued sustainable investmentsa Joint Center Columbia Law School and Columbia Climate School.
The world’s energy systems and digital infrastructure undergo rapid and interconnected transformations. The continuous expansion of data centers surrounded by growing demand for cloud computing, artificial intelligence, machine learning and next-generation digital services is driving a rapid and significant increase in energy consumption in certain markets affecting global energy systems. At the same time, these data centers support the suite of digital technologies are transforming critical public services across sectors such as healthcare, education, food systems, transportation and financial services, while restructuring the design, efficiency and resilience of the energy systems they rely on. Much of the global coverage of data center expansion is not surprising due to concerns about grid reliability. Electricity availability And the impact of the rapid rise in energy demand on the climate.
But that story misses a transformative opportunity for data center growth– Particularly in light of the convergence of energy systems, digital infrastructure, and the Sustainable Development Goals. Technology companies, especially hyperscalers, can play a unique role in the future of low carbon and integrated energy. Through 24-hour demand, system-level optimization tools, and influence in digital connectivity, they could become key partners in accelerating the global energy transition and shaping a more inclusive and resilient future.
There are three interconnected challenges that strategic cooperation can collectively address between technology companies, policymakers, utilities and financial institutions.
- Data centers need continuous, high quality power and increasingly need it Requires that the electricity is 100% zero carbon. I also want to procure component parts Suppliers with clean energy. However, in many markets, particularly emerging economies, this surge in demand for clean electricity It exceeds the system preparation And decarbonisation of the grid is slower.
- Clean Energy and Energy Storage Projects face barriers to sustainable funding and integration. Despite the lower technology costs, many renewable projects are hampered by lagging, setting challenges and allowing delays in the grid interconnection process. US In Southeast Asia. These bottlenecks exacerbate the underlying financial barriers. In emdes, High capital costs – 3-5 times greater than OECD countries– Renewables are still the main reason that costs are kept down. In developed countries, storage solutions that promote renewable energy integration face sustainable funding challenges due to uncertain sources of revenue and high costs.
- Digital inclusion remains uneven around the world. Especially in rural areas, underserved or marginalized communities.. Digital tools are transforming the provision of energy, healthcare, education, agriculture, financial inclusion and transportation; Approximately 2.7 billion people are still offline. This “digital disparity” is still at risk of entrenching existing inequalities, just as innovation offers new avenues.
This is where (and why) tech companies can play a transformative role. When embedded in a strategic policy framework and coordinated with public and private partners, they can actively address these three challenges and unlock critical development dividends.
Fixed clean energy and storage integration by demand
Energy demand from data centers today is unusual. High, stable and predictable demand with an emphasis on expected growth and zero carbon procurement. High-tech companies without adjustment Choose from a custom-made off-grid power solution– In other words, Bypass the country or region system This requires strategic investment and financing to upgrade and expand the grid infrastructure. However, if they are integrated early with utilities and energy planners, they Long-term sourcing commitments can lock in the expansion of the green grid Reduce marginal costs for all users.
Critical, the need for reliability for hyperscalers also creates a fundable demand for large-scale energy storage. Storage deployments are struggling worldwide due to uncertain and multi-tier revenue streams. Storage often relies on arbitrages, auxiliary services and capacity markets– It is inherently unstable and insufficient “bankable”. Long-term storage off-take agreements with data centers can generate reliable cash flows and ultimately make them financially possible on a large scale. This funding model remains globally relevant, but may be particularly transformative in emerging economies and developing countries (EMDES). Embedding storage solutions into early stage grid designs in these contexts enables a jump path to a clean, reliable and resilient energy system.
Beyond electricity, data centers need sophisticated water and cooling systems. It is considered a debt In the context of limited resources. However, water and cooling needs can also be rethinked as enablers. Learn from evolving practices in the mining sector; You can leverage your data center’s water treatment and cooling system needs to ensure access to affordable water and cooling infrastructure for the surrounding communities. This approach has been proven It is possible in the mining sector,Integrated multi-user water systems have been successfully developed with clear governance, cost allocation, and operational arrangements. Datacenter is already in use Captured heat waste To support District heating Emissions have been significantly reduced. Deliberate integration allows data centers to lock the broader community infrastructure, expand access, build resilience, and reduce local/city-wide emissions and waste.
Optimizing energy systems with digital technology
Not only are technology companies high-strength consumers, they also produce the very tools they need to optimize and upgrade their energy systems. Such technical applications include:
- Smarter grid design: Identify the best sites for renewable generation, storage deployment, and transmission upgrades to minimize costs and maximize reliability.
- Accelerated Interconnect: rationalization Interconnection Review ProcessClean Energy deployment reduces slow delays.
- Expanding Dispersive Energy (DE) Solutions: DE solutions require sophisticated techniques to combine a variety of energy sources and smart control systems to ensure that distributed solutions are reliable and resilient.
- Optimized demand response and load management: Leverage AI to dynamically manage electricity demand, reduce peak loads, stabilize grids, and reduce system costs.
- Preventive Maintenance: Use real-time data in predictive analytics to detect problems early and optimize maintenance.
Promisingly, these technologies are not deployed strategically or systematically in most development markets, like the data centers themselves, which can significantly increase energy and grid efficiency, reduce costs or delays, and increase resilience. As energy systems become more integrated, decentralized and dynamic, many of these digital tools become essential to ensure grid efficiency, resilience and scalability. In emerging markets, by integrating these optimizations early in grid design, these countries jump over previous technologies to develop smarter energy systems and remove the grid. However, achieving full value requires coordination with grid operators, regulators and system planners. Ultimately, the tools must be integrated with other offtakers in the grid and at the right points of development, ensuring interoperability and a supportive regulatory framework.
Expanding access to broadband and digital solutions
The modern economy is rapidly becoming digital, and innovative digital tools are bringing transformative benefits to healthcare, education, land use management and agriculture, financial inclusion and transportation systems, among other parts of the economy. In fact, universal access to broadband and digital services is increasingly recognized as the basis for achieving the Sustainable Development Goals. nevertheless, Access to broadband and digital tools is extremely unevenundermine access to valuable services and widen the digital gap.
Technology companies are strategic partners that expand access to digital infrastructure, including data centers that enable internet connectivity, data processing and digital services, fiber optic networks, and wireless towers. Just this year (2025), IFC provided Raxio Group with $100 million in debt financing To expand Africa’s digital infrastructure. In India, National Broadband Mission 2.0 has set an ambitious goal of expanding fiber optics to 270,000 villages by 2030,Strategically deployed data centers act as core nodes that distribute capacity to rural areas.
In a more advanced market, data centers can act as anchor tenants for a wider range of digital infrastructure, catalyzing high-speed fiber optic investments and other digital infrastructures, benefiting the data center and surrounding communities.
As digital services expand, so will the demand for affordable, reliable electricity. This brightens the link between broadband access, clean energy deployment and comprehensive economic growth.
Strategic paths to advance
Displaying data centers as primarily energy-intensive offtakers misses the systematic potential of being digital and energy infrastructure multilia and acts as the backbone of both grid and digital transformations. With a suitable cross-sectional planning framework, policy development, incentives and market design, data centers can help solve the very constraints that hinder clean energy deployment, energy systems efficiency, and universal digital access. In doing so, they can provide based on national and regional climates and broader sustainable development goals.
Columbia Center on Sustainable Investment (CCSI) works with partners to design policies and investment channels that can expand these integrated models. Based on our pioneering work Shared Use Mining Related Infrastructurewe are investigating institutions, investments and operational models that can support this convergence. We hope to shape new approaches to planning and policy decisions that reflect the opportunities and orders of connected low-carbon economies through high-level dialogue, including the 2025 high-level convening on ASEAN’s energy and digital futures.
The opinions and opinions expressed here are those of the authors and do not necessarily reflect the official positions of the Columbia School of Climate, the Institute of Earth, or Columbia University.
