Global spending on data centers is expected to reach several trillion US dollars by 2030, with the United States and China leading this growth. Allianz Commercial experts report that some construction projects now exceed $20 billion as demand rises for facilities to support artificial intelligence (AI) and cloud computing.
A recent Allianz Commercial report, "The Data Center Construction Boom," highlights how rapid expansion in this sector is introducing new risks and exposures for both companies and insurers. According to market research cited in the report, up to $7 trillion could be invested in data centers by 2030. The largest share of these investments comes from technology firms in the US and China. The major global cloud providers—Amazon, Microsoft, and Google Cloud—accounted for nearly two-thirds of global cloud revenue in the second quarter of 2025. Chinese companies such as Alibaba and Tencent also contribute significant capital expenditure toward industrial-scale infrastructure required by AI and cloud computing.
Construction costs have risen sharply over recent years. Average-sized data center facilities now cost between $500 million and $2 billion, a significant increase from previous estimates of $200–$300 million per project. Some developments have exceeded $20 billion in total costs. Allianz Commercial’s construction experts note that these rising prices reflect not only scale but also complexity; building data centers requires specialized insurance coverage due to unique risks such as power supply concerns, faulty workmanship, fire hazards, or natural disasters.
“Construction projects as complex and extensive as data centers require significant time and resources. Typically, they require project-specific policies given their size and their unique risk profile that demands specialized insurance,” says Darren Tasker, Head of Construction, Americas, at Allianz Commercial.
The United States remains the world’s largest market for data centers. By 2028 it is projected to account for about two-thirds of global power demand from data centers with 81 gigawatts (GW), while China continues aggressive expansion—Greater Beijing alone represents roughly 10% of global hyperscale capacity. In Europe, activity is increasing by an estimated 43% annually; London and Dublin are leading markets there.
“The bigger data centers have a huge footprint. The scale of a $20bn+ facility can involve tens of thousands of workers on site at peak times, with significant equipment and building supplies moving in and out,” says Chris Fancher, US Head of Construction Property at Allianz Commercial. “Timings can be tight. This requires expert coordination, as any missteps or faulty workmanship can lead to potential losses or costly delays.”
The surge in construction brings multiple risks alongside growth opportunities. Soaring electricity demand threatens grid capacity: global consumption from data centers may more than double by 2030—to around 945 terawatt hours (TWh), which matches Japan’s current national usage for its population of about 124 million people. To address reliability concerns—which account for about 45% of impactful outages—operators are increasingly generating their own power onsite through renewables, gas turbines or potentially small nuclear reactors.
Other risks include fire hazards associated with lithium-ion batteries used in server racks; water use for cooling (which can reach up to 19 million liters per day per large center); rising energy needs; and increased vulnerability due to climate change affecting key hub resilience worldwide.
"Currently, there are no clear signs the growth in data centers has reached its peak, but there could be a check on the industry’s upward trajectory. Future demand for AI is difficult to gauge, due to rapid technological advances and various barriers to widescale roll-out. This has led some commentators to voice fears about a bubble, over-investment, and the prospect of stranded assets,” says Darren Tasker.
Allianz Commercial operates globally as part of Allianz Group's commercial insurance business serving mid-sized businesses through large enterprises across more than 200 countries and territories via its own teams or partner networks.