Data centre operators could cut headline capital costs by around 80% by retrofitting existing facilities for liquid cooling instead of building new AI-ready capacity from scratch.
That’s according to new research from STL Partners that suggests liquid cooling retrofits can cost around $2 million per MW, compared with upwards of $11 million per MW for new greenfield liquid-cooled capacity.
That makes retrofit an increasingly attractive option for operators sitting on existing power allocations in markets where land, grid connections and planning permission are slowing the development of new sites.
Just yesterday, hi-tequity’s Ryne Friedman wrote for Data Centre Review highlighting how retrofit is the fastest route to AI capacity, and now STL Partners’ research is backing it as one of the more affordable options too. That should make it an easier decision for operators, but it’s still true that converting existing facilities into AI-ready environments can be disruptive and technically complex – meaning it’s not for the faint of heart.
STL Partners is also keen to stress that retrofit should not be seen as a universal fix for AI demand. While the headline cost comparison is compelling, the full investment case can look very different once operators factor in customer workload migration, downtime, lost tenancy revenues and the limitations of legacy infrastructure.
That means the question is not simply whether a facility can be retrofitted, but whether it should be. A site may have the right power profile, but still struggle to support the physical, operational and commercial changes required for liquid cooling.
“AI demand is changing the economics of data centre cooling. Retrofit can look very attractive on headline capex, especially where operators already hold scarce power, but the real question is whether the customer demand, physical asset and operational plan are strong enough to justify the disruption,” said Alice Awdry, Consultant at STL Partners and author of the report.
The report also notes that the type of operator matters. Hyperscalers and AI scale-ups may be able to move earlier because they can underwrite demand internally. Wholesale and retail colocation providers, on the other hand, are likely to need stronger customer commitments, lease certainty and detailed migration plans before making major changes to live sites.
“Operators should not retrofit simply because liquid cooling is the direction of travel. They need a clear trigger point, a retrofit-ready asset and a plan for live-site risk management. The winners will be those that combine demand certainty with disciplined execution,” added Awdry.
