Data Center Bytes

California lawmakers have recently focused renewed attention on the rapid growth of data centers, driven in large part by cloud computing and artificial intelligence capacity demands. Concerns about grid reliability, electricity costs, and environmental impacts prompted a flurry of legislative proposals in the 2024–2025 session. The result, however, is a more incremental regulatory approach than many industry participants initially expected. This post highlights what has passed, what stalled, and what data center developers and operators should be monitoring going forward.

Ayman Khaleq, a partner at Morgan Lewis, is widely recognized as one of the leading advisors on cross-border investments, digital infrastructure transactions, and securities technology–industry regulatory frameworks in the Middle East. Ayman guides institutional investors (including sovereign wealth funds), private equity investors, and regional operators as they navigate complex legal and regulatory landscapes and structure large-scale data center and tech-sector investments. His perspective offers valuable insight into how the United Arab Emirates (UAE) and Saudi Arabia have become two of the most dynamic and competitive data center markets globally. His on-the-ground experience offers helpful insight into where the market is today—and where it is headed next.

A landmark set of US-UK agreements signed during US President Donald Trump’s 2025 state visit is poised to accelerate deployment of advanced nuclear technologies—and with it, nuclear-powered infrastructure like data centers. As part of the broader Technology Prosperity Deal, the United States and United Kingdom committed to developing secure AI infrastructure, including high-performance computing and data centers that will be increasingly powered by clean, reliable nuclear energy. This collaboration highlights how advanced reactors can play a central role in supporting the energy-intensive AI and digital economy.

The explosive growth of artificial intelligence has fueled a surge in data center projects across the United States, with industry forecasts projecting $475 billion in spending for 2025 alone and trillions more over the next decade. Recent federal initiatives, including streamlined permitting and funding through the administration’s AI Action Plan, are expected to accelerate this trend.

In a major move to bolster US digital infrastructure, the White House issued an executive order on July 23, 2025 aimed at accelerating the federal permitting process for data centers and related infrastructure. The order is part of a broader strategy to support rapid deployment of artificial intelligence (AI) technologies and meet growing power demands.

The US administration released its Artificial Intelligence (AI) Action Plan (Plan) on July 23, 2025. This Plan seeks to encourage innovation in AI along with an aggressive buildout of AI data centers, as well as the energy infrastructure needed to power them.

The demand for data centers is continuing to accelerate, fueled largely by generative artificial intelligence, broader digital transformation, and organizations migrating to cloud infrastructure. To help navigate key challenges for meeting demand, from a vendor’s perspective, Morgan Lewis partners Barbara Melby and Mike Pierides recently authored an Insight titled Data Center Operations: Aligning Supply Chain, Compliance, and Customer Expectations. The article explores key challenges for bringing new capacity online, an operational overview of data centers, contractual considerations, and customer expectations around security, availability and resilience.

The growing interest in generative artificial intelligence (AI) has triggered a race to develop the technology, driving demand for high-density data centers and significantly increasing predicted electricity consumption. Research from the US Energy Information Administration and Goldman Sachs indicates domestic and global record-high energy demand is quickly approaching.

The convergence of three disruptive forces—(1) migrations from on-premises data centers to the cloud, (2) the increased focus on connected device and digital solutions, and (3) the explosive rise of generative AI—has resulted in a race to finance, design, build, power, and operate data centers to support them. This growing demand for data centers is prompting significant regulatory, operational, and infrastructure developments throughout the world, including recent initiatives and investments in the United States, Europe, and the Middle East that underscore this growing momentum.

The Winter 2025 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey highlights significant changes in California’s commercial real estate market, driven by the growing adoption of cloud computing, machine learning, artificial intelligence (AI), and the shift to hybrid working models, all of which have led to data centers and related digital infrastructure being the largest growth sector in new industrial projects.