In decades past, a warehouse was simply a large building used for storing goods and materials you didn’t need to access anytime soon. The best place to build these facilities was in rural areas far from cities, where land was cheap and back roads were good enough to support the occasional truck making a delivery.
But today, those facilities are more often known as distribution centers, and they’re located near major highways close to the urban areas in order to support high inventory turnover and enable lightning-fast deliveries to homes and stores. And one more thing has changed: They increasingly need access to large amounts of electrical power to run the automated systems and robotics inside that allow them to operate at such high speeds.
In fact, commercial real estate firm Cushman & Wakefield has pointed to the cost and availability of electrical power as a growing concern for companies seeking sites for modern DCs. Meanwhile, logistics real estate giant Prologis recently boasted of building a DC in the Netherlands that was designed to solve that problem by making and storing much of its own energy on site through a large-scale solar network. In Prologis’ words, “Across the world, companies are running into the same problem: They want to grow—but the power grid can’t keep up. From the U.S. to Europe to Asia, grid congestion has become a barrier to progress, slowing projects that could bring jobs, innovation, and investment to local communities.”
However, even a widescale shift to solar won’t provide nearly enough power to support another type of technology that’s becoming increasingly crucial for warehouse operations—artificial intelligence (AI). Many forecasts for 2026 say that AI will begin to take over large swaths of logistics tasks currently done by company employees, whether it’s answering phones, forecasting inventory needs, or planning delivery routes. To meet the expected demand, major tech companies are rushing to construct the infrastructure that supports AI, which runs on graphical processing unit (GPU) chips inside powerful computer servers located in another kind of DC—the data center. And as we’ve all heard by now, data centers consume staggering amounts of electricity.
If AI expansion comes anywhere close to those projected levels, the estimates for those new power needs are stunning. At a recent trade show in New York held by the enterprise software vendor IFS, speakers said society will need a 50% increase in electrical power production by 2030 to support AI. Another speaker set the bar even higher, projecting that demand for electricity would triple by 2050 when those AI power demands are added to “the electrification of everything,” the term for global decarbonization efforts aimed at switching households, transportation operations, and industry from carbon-based fuels to electricity, according to Sabine Erlinghagen, CEO of Siemens Grid Software.
The limitations of electrical grids are already beginning to slow the development of one kind of DC—the distribution center—and will soon start to restrict the growth of the other type of DC—the data center. In coming years, both of those bottlenecks could have major effects on the entire supply chain industry.
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