The rapid expansion of the data center industry has become one of the defining trends of the modern technological era. Predictions suggest that global demand for data center capacity will triple in the next five years, driven by explosive growth in AI, cloud computing, and other data-intensive technologies. Alongside this growth, the need to ensure the resilience, efficiency, and safety of these facilities has never been more urgent.

Data centers are the backbone of everything from streaming entertainment to global logistics systems. But as they grow in size, power demand, and complexity, so do the challenges they face. In this article, we’ll explore the key takeaways from a recent discussion with industry experts at Factory Mutual (FM), where they delved into the critical factors shaping today’s data centers: power generation, cooling advancements, emerging risks, and how the industry can stay ahead of the curve.

The Changing Face of Data Centers

Unprecedented Growth and Complexity

The data center industry is expanding at a staggering pace. With over $7 trillion expected to be spent to meet global demand, this sector is evolving into a cornerstone of critical infrastructure for industries as diverse as healthcare, aviation, real estate, and national defense.

However, this rapid expansion comes with challenges. According to FM’s experts, today’s data centers look vastly different from those built just five years ago. Key changes include:

• Increased Power Density: The growing reliance on AI and high-performance computing has led to denser equipment configurations, multiplying power and cooling demands.
• Advanced Cooling Techniques: Traditional air-cooling methods are being replaced by liquid cooling systems to handle the heat generated by modern GPUs and servers.
• Massive Scale: Once modest facilities requiring 10 megawatts of power, data centers now resemble sprawling campuses consuming hundreds of megawatts - equivalent to the energy needs of small cities.

These advancements highlight the growing importance of robust infrastructure and risk management strategies for data centers.

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Cooling Innovations: From Air to Liquid

One of the most transformative changes in data centers is the move from air cooling to direct chip liquid cooling. Historically, cold air was circulated through server rooms to prevent overheating. But as servers become more power-hungry and compact, air cooling is no longer sufficient.

Liquid cooling, where fluids absorb and dissipate heat directly from the chip, offers several advantages:

• Efficiency: Liquids conduct heat more effectively than air, reducing energy consumption.
• Scalability: This method supports higher power densities, enabling more servers to operate in the same space.
• Future-Proofing: As demands on servers continue to increase, liquid cooling is poised to become a standard feature in next-generation data centers.

However, adopting liquid cooling also introduces new risks, including potential leaks and contamination, which require careful engineering and maintenance.

The Lithium-Ion Challenge: Managing New Hazards

Lithium-ion batteries are revolutionizing the power systems of data centers, offering compact and efficient energy storage solutions. These batteries are being integrated into Uninterruptible Power Supply (UPS) systems, battery backup units (BBUs), and energy storage systems. But they also introduce a significant hazard: thermal runaway.

Thermal runaway occurs when a battery overheats, potentially causing fires or explosions. FM is actively researching ways to mitigate this risk, focusing on:

• Developing Fire-Safe Standards: Creating systems that prevent thermal runaway from spreading between battery modules.
• Explosion Prevention: Designing containment systems to manage the risk of gas buildup.
• Material Testing: Evaluating construction materials to ensure fire safety.

Despite these risks, lithium-ion technology is key to ensuring power resiliency in an era of increasing energy demands.

Power Generation: A Bottleneck for Growth

As data centers scale up, their power requirements often exceed what local grids can supply. Many operators are turning to on-site power generation, including gas turbines and renewable energy solutions. However, this shift presents unique challenges:

• Customized Engineering: Building power plants alongside data centers requires expertise in both sectors.
• Redundancy: Operators often install more equipment than needed to ensure uninterrupted power supply, even during maintenance.
• Regulatory Compliance: Involving utilities or third parties for operations can add layers of complexity.

Power availability will continue to influence site selection, with areas like Texas, Iowa, and New Mexico gaining prominence due to their ample land and energy resources.

Building Resilient Data Centers: Key Features

A truly resilient data center must account for operational, environmental, and structural risks. FM experts envision the data center of the future as:

• Non-Combustible: Using fire-resistant materials to minimize fire risks.
• Climate-Resilient: Located outside flood zones and designed to withstand local weather conditions like high winds or hail.
• Highly Redundant: Incorporating N+1 or N+2 configurations to ensure continuous operation even during equipment failures.
• Controlled Lithium-Ion Deployment: Implementing fire-safe systems for battery storage and backup.
• Minimal Combustibles: Reducing plastics and other flammable materials in server racks to limit fire propagation.

Emerging Risks: Complexity and Supply Chain Challenges

The sheer complexity of modern data centers introduces risks that didn’t exist a decade ago. Key concerns include:

• Maintenance Errors: Human mistakes during routine maintenance can have catastrophic consequences.
• Supply Chain Bottlenecks: With global demand outpacing production, shortages of key components like transformers and switchgear are a growing concern.
• Cooling and Power Failures: Interruptions in these critical systems could lead to significant downtime and financial losses.

The industry must take a holistic approach to risk management, focusing not just on hardware but also on operational processes and human factors.

Key Takeaways

• Unprecedented Scale: Data centers are evolving into industrial-scale facilities with power demands rivaling small cities.
• Cooling Innovation: Liquid cooling is becoming the gold standard for managing heat in high-density server environments.
• Lithium-Ion Risks: Batteries are essential for power resiliency but require stringent fire safety measures.
• Power Bottlenecks: On-site power generation is becoming critical as grid connections lag behind demand.
• Resilient Design: Future data centers will focus on fire-resistant materials, redundancy, and climate-resilient construction.
• Operational Excellence: Holistic risk management, including human error prevention and supply chain strategies, is key to success.

Conclusion

Data centers are no longer just warehouses for servers - they are complex ecosystems that power our digital lives. As the industry continues its meteoric rise, ensuring the resilience, safety, and efficiency of these facilities is paramount. By adopting cutting-edge cooling techniques, managing lithium-ion risks, and addressing power constraints, operators can build data centers that not only meet today’s demands but also anticipate the challenges of tomorrow.

The modern data center is a critical enabler of progress in virtually every sector. As such, the responsibility to safeguard these infrastructures extends to engineers, underwriters, and developers alike. By leveraging expertise and proactive risk management, the industry can ensure that data centers remain a cornerstone of global innovation.

Source: "Building a Better Data Center" - FM, YouTube, Jan 6, 2026 - https://www.youtube.com/watch?v=yxflb6OGLag

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