Kevin Domnick
Principal
Inverto Cologne
Data and AI may be the oil of the future. Data Centers are the refineries and their fuel is power.
Data and AI are widely regarded as the oil of the future – the raw material powering the future ways we work, innovate, and create value. To refine this new oil, vast data center capacities are required, leading to massive CAPEX investments.
The world’s largest tech players are spending at unprecedented scale: Big Tech plans to spend three-digit billions of dollars on data centers in fiscal year 2026 alone. Yet building and operating these facilities requires scarce resources – from energy and raw materials to skilled labor. To bring plans to reality, strategic procurement becomes a decisive success factor, explains Kevin Domnick, Principal and expert for Energy providers at Inverto, in this interview.
Data centers are often described as the backbone of the digital economy. How does the rise of AI models change data center construction?
With the rise of AI and increasingly compute-intensive applications, data centers are no longer just supporting cloud adoption but are becoming infrastructure assets with energy demands comparable to heavy industry, 10 to 50 times higher than that of a standard office building. Computing capacity has turned into a strategic competitive factor for entire economies, leading to the need for substantial capital investment.
Energy companies are critical enablers of data centers. How is their role evolving?
Data centers are extremely energy-intensive assets. This makes strategic partnerships with energy providers essential, not only to secure sufficient volumes of power, but also to ensure competitive conditions and long-term planning security. Data centers depend on reliable, redundant power. They already consume around 7% of U.S. electricity. Many facilities target uptime levels of around 99.98%, which require firm, stable capacity. Furthermore, due to the high energy demand, electricity prices materially affect competitiveness: a fluctuation of $50 per megawatt hour can change life cycle costs of a data center by 6–13%.
Given their experience with large-scale CAPEX projects and infrastructure delivery, do you see energy companies becoming more active as data center operators or developers themselves?
Until now, it’s not common even though energy companies understand large-scale infrastructure delivery, grid integration, and long-term asset management. At the same time, energy providers are becoming increasingly data-driven themselves: with smart metering, digital grid management and data-driven optimization of generation and distribution, energy companies generate and process enormous volumes of data. This makes data infrastructure a more strategic topic and also a significant cost element, as they currently have to buy data center capacity externally.
Looking beyond energy and energy infrastructure – what are the key procurement requirements when constructing a data center?
The starting point is selecting the right execution model — typically EPC or EPCM — and ensuring strong, experienced contractor management from the outset. Given the scale and complexity of hyperscale projects, robust governance and interface management are critical.
The challenges lie in accessing sufficient capabilities and ensuring reliable supply as the construction environment is highly constrained. Our CAPEX study indicates labor shortages in construction and engineering, alongside supplier and materials bottlenecks. All of these require early procurement involvement, clear strategies and careful sequencing. For example, we currently see prolonged lead times for generators, transformers, UPS systems, and high-voltage substations.
Where do you currently see the greatest risks — and where are the most strategic opportunities?
The main risks are clear: constrained power capacity, prolonged equipment lead times, labor shortages, and regulatory challenges. These factors can delay projects and materially impact its economic success.
Energy providers that can secure reliable, scalable capacity and structure long-term partnerships with operators can position themselves as strategic enablers and benefit from the immense opportunities in this field. As said: Data and AI are the oil of the future. Based on disciplined CAPEX governance, development of a resilient supplier network and innovation partnerships, strategic procurement can convert present constraints into sustainable competitive advantage.
EPC (= Engineering, Procurement, Construction) is a project delivery model in which one contractor takes full responsibility for designing, procuring, and building a facility, typically delivering it on a turnkey basis at a fixed price.
EPCM (= Engineering, Procurement, Construction Management) means the contractor manages and coordinates these activities on behalf of the client, but the client holds the contracts with suppliers and contractors and retains more risk and control.
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Principal
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