Infrastructure & Utilities

Data centers stand apart from other project finance asset classes, uniquely blending three critical risk dimensions: real estate, traditional infrastructure, and technology. While the relative importance of each may vary from project to project, all three are essential in S&P Global Ratings' risk assessment.

The real estate dimension reflects the physical durability of the building and/or land, often spanning several decades—like other long-term assets in the sector. The infrastructure dimension centers on the reliability and resilience of core systems, such as power supply and cooling. However, it is the technology dimension that most directly determines the useful economic life of a data center. Rapid advances in IT hardware, software, and evolving tenant requirements can sharply reduce the period during which a facility remains competitive and fully utilized—even if the physical structure remains intact.

This interplay of risks has become even more pronounced with the rise of data center financing structures that feature minimal amortization and large bullet payments. While our criteria allow for asset lives of "up to 50 years" for some infrastructure assets, the risk of technological obsolescence often means the realistic operational life of a data center is much shorter—typically around 25 years in our analysis. As such, we view asset life as a function of all three risk dimensions, with the sector's risk profile evolving alongside market and technological changes.