Power Supply as a Key Location Factor for Data Centers

October 29, 2026

Source: E & M powernews

The boom in AI and cloud services is increasing the power demand of data centers. As a result, motor-driven power plants are being installed more and more frequently.

The expansion of AI applications and cloud services is driving up the electricity demand of data centers. At the same time, a lack of grid capacity at many locations is limiting growth. Motor manufacturers such as Everllence are therefore seeing rising demand for decentralized power plant solutions. “A large portion of our order intake in the power plant business now comes from projects for data centers,” says Alexander Stöckler, Head of Sales Power at Everllence, in an interview with our editorial team.

According to the Augsburg-based engine manufacturer (formerly MAN Energy Solutions), the global market for data center power solutions has thus changed within just a few years. The company has been observing an increase in such inquiries for about three years. According to Stöckler, three out of five inquiries in the relevant business sector now pertain to data centers.

“The market has become highly dynamic,” says Stöckler. “Demand is currently coming primarily from North America and parts of Europe, and we’ve recently started seeing inquiries from the APAC region as well.”

Behind these projects are often data center developers who are building sites for hyperscalers. As a result, the eventual users do not necessarily deal directly with the power plant suppliers. In the interview, Stöckler specifically mentions the major providers of cloud and IT services, noting that they are the biggest drivers of this trend. “In addition to the expansion of cloud capacities, the proliferation of AI applications in particular is increasing the power requirements of data centers,” he says, explaining the current trend.

Grid Connection Becomes a Bottleneck

However, rising electricity consumption is not the only decisive factor for the power plant market. In quite a few regions, the power grids simply cannot keep pace with the speed at which data centers are being expanded. This is particularly true in the U.S., Stöckler explains. In some cases, new data centers there are being planned without adequate grid connections because the existing infrastructure cannot accommodate the additional loads in the short term. Operators and developers must therefore build their own generation capacity if they want to bring their projects online without years of delays.

This is also changing the market for engines and power generation technology. “Traditionally, gas turbines were the primary choice for large power units. However, with the expansion of data centers, engine-powered plants are gaining in importance,” says Stöckler.
“One reason is scalability: Instead of providing the entire power plant capacity in a single unit, individual engines can be turned on or off depending on current power demand.”

Demand is particularly high in the U.S. at present. Stöckler points to structural differences between the German and U.S. power systems. In particular, U.S. states such as Texas have a largely independent power grid. Additional loads from data centers there encounter a system with limited capacity to exchange power with other regions. This increases the incentive for developers of large data centers to design their power supply to be at least partially independent of the public grid.

In Germany, a different trend has emerged so far. A market analysis conducted by Everllence concluded that while there is a “larger number of data centers, many of them have comparatively low capacities of around 10 MW,” says Stöckler, explaining the situation in the domestic market. Large-scale projects modeled after the sites currently being developed in North America, on the other hand, remain the exception.

“Everllence does receive inquiries for Germany as well,” Stöckler says in the interview, “but so far there is no market momentum here comparable to that in North America.” He cites approval processes and the acceptance of large infrastructure projects as obstacles. In the case of data centers, issues related to water consumption for cooling and land use are also factors. However, these conflicts are not limited to Germany. According to him, new data centers in the U.S. are also increasingly facing resistance in densely populated regions.

Author: Heidi Roider