In 2025, data centres face soaring AI demands and mounting regulatory pressure; David King, Product Engineering Architect at Cadence, explores how digital twins could help navigate these challenges.

2025 will mark a period of significant data centre evolution, driven by the rapid uptake of AI and consequent acceleration of energy demands. Against this backdrop, retrofitting older facilities and building AI-optimised infrastructure will become critical. At the same time, new sustainability regulations will push the industry towards smarter and greener operations. 

Both will be challenging shifts to manage. However, there are technologies available, such as digital twins, that will play a key role in facilitating the changes. Especially when coupled with a new wave of skilled, sustainability-driven talent dedicated to empowering data centres to meet AI demands responsibly and efficiently.

Data centre gear up for an AI revamp

Data centres will face a pivotal moment this year as energy usage, especially to power AI, continues to rise. Facilities will start to realise that there really isn’t enough energy. While newly built facilities optimised for AI can handle these requirements more effectively, retrofitting older data centres to accommodate increased power and cooling is necessary to meet demands. However, it is costly and complex. This pressure is prompting operators to both plan infrastructure upgrades and invest in purpose-built facilities designed to power AI.

Amid these changes, digital twins will be crucial for enhancing data centre efficiency in both new and existing data centres. By simulating physical facility environments, digital twins allow operators to optimise power distribution, improve cooling techniques, and test energy changes, helping to maximise resource use and reduce stranded capacity. This technology not only makes the most out of existing space, it also supports sustainable growth, setting a new standard for energy-efficient, AI-capable data centres.

Balancing AI growth and sustainability 

In 2025, data centres will face mounting pressure to reconcile AI’s surging energy requirements with strict sustainability goals, sparking an industry-wide rethink on AI applications. The infrastructure required to deliver on AI is poised to drive a 160% increase in data centre power demand. This challenge is creating a crucial turning point for data centres to support high-density compute loads while advancing their environmental commitments.

Companies will face a new crossroads. Many that initially rushed into AI, driven by competitive urgency, will now reevaluate its financial and energy impact, with some in-house setups costing up to $300,000 (~£250,000) in hardware alone. This shift will likely push organisations toward selective, high-value AI applications that provide stronger operational returns, including within data centres. However, demand will remain high, stretching capacity to its limits. 

As such, tools like digital twins will be essential for data centres to meet AI goals sustainably, allowing operators to proactively manage power, integrate renewable sources, and optimise cooling measures to meet AI’s GPU usage demands. With these advancements, data centres can help organisations make AI investments that are both impactful and environmentally responsible.

EU’s 2025 Energy Efficiency Directive will prompt data centre accountability

In addition to internal sustainability drives, the EU Energy Efficiency Directive’s new reporting requirements, starting in May 2025, will mark a significant step in formally measuring energy and water usage within the data centre industry on a wide scale. By establishing initial data points, the directive will enable an ongoing comparison of industry performance, potentially paving the way for new regulations or targets that promote greater energy efficiency. The results will likely reveal a diverse landscape, where some companies, particularly within tech, show measurable progress, while others lag behind, exposing varying levels of commitment to environmental goals.

What’s more, with public interest in data centres’ resource use on the rise, these findings could invite heightened scrutiny, especially if data points to excessive energy consumption or local grid strain. This may lead to ‘naming and shaming’ by the media, heightening societal pushback even further.

However, the EU’s transparency-driven approach and heightened scrutiny should encourage data centres to adopt greener practices and utilise tools like digital twins to both meet compliance standards and mitigate public backlash. Ideally, this will set a new benchmark for sustainability and accountability across the sector.

Could Gen Z help close the skills gap?

Young talent is expected to drive the move towards more sustainable practices while managing AI’s impact. From 2025 onwards, the data centre industry will see a substantial generational shift as seasoned professionals retire and younger, tech-savvy talent brings in specialised skills in AI, automation, and sustainability.

Traditionally focused on physical infrastructure, data centre roles are evolving to require advanced technical skills such as proficiency with digital twin simulation software. These tools are crucial in modern data centres for optimizing energy use, airflow, and resource allocation, marking a proactive shift toward efficiency and sustainability.

Sufficiently equipped

The data centre industry faces several challenges; however, sourcing the right technologies and talent will help relieve the pressure. With both in place, the industry will be empowered to create the data centres of the future – able to manage AI demands while meeting imperative sustainability goals.