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Data centers have been around in some form or another since the development of the first room-sized computers in the 1940s and 1950s. As a business model, they experienced an initial boom with the rise of the internet in the 1990s.

But as of 2026, thanks to AI, data centers face demand on a previously unheard-of scale, and it’s only going to grow.

A team of five student research scholars at Leavey’s Sustainable Business Institute (SBI) is working with global data center specialist Equinix (with headquarters in Redwood City) on a case study that outlines both this massive uptick in demand and the sustainable solutions available to meet it. 

Alexis Vuong, a junior studying finance, had previous experience interning at a firm working in sustainable oil. She was drawn to SBI by the possibility of examining the tension between rapid growth and long-term, ethical solutions. “I was always really interested in the question of how companies and economic systems can balance growth with sustainability and ethics,” Vuong says, “which is a question that we're addressing with this case study.”

The data the student team put together for a symposium presentation in March illustrate the need: AI investment accounted for a whopping 35 percent of GDP growth in America in 2025, according to the Federal Reserve Bank. In turn, demand for data centers is set to grow by roughly 10 percent per year every year between now and 2030, per research from McKinsey & Company. By 2035, data centers worldwide may use five times as many gigawatts of energy as they did in 2025.

AI brings its own particular technical concerns, too. For example, AI servers use 5 to 10 times more power than traditional servers, and certain top-of-the-line computing chips exceed data centers’ current capacity to cool appropriately for proper equipment function.

Companies such as Equinix have to consider not only the need to keep up with demand, but also the energy sources they choose to do so. Powering the company’s 273 data centers in 36 countries accounts for a total of 28 percent of the company’s cost of revenue. Pursuing better energy efficiency and sources of renewable energy can improve both their operations and their bottom line. 

“When energy use grows at a pace like this, it raises real concerns about sustainability, especially in places like California with strict climate goals,” says Kayla Fong, a senior studying accounting and finance. “This creates a real trade-off for companies like Equinix. They need to be financially sustainable, as well as meeting other goals and policy requirements. This all affects cost, risks and long-term goals.”

Current and Future Approaches

Students on the SBI case study team had a decent sense of what data centers do before the project began in winter quarter. But a visit to an Equinix data center in San Jose — arranged by SBI industry advisor and Leavey adjunct lecturer Brian Thomas — made both the work and the challenges feel more real.

“It's one thing to read about it, but it's another thing to see it in person, to learn about the cooling process, to hear about the company’s strategy and interact with the people who work there,” says Jacqueline Martinez, a senior studying accounting and information systems. “That trip gave us a good picture of exactly what we were working on.”

It also gave them contacts. Martinez, Vuong and Fong, along with engineering students and fellow team members Daniel Koo and Nina Mahdawe, have drawn data and perspective from Equinix leaders including Patricia Leyva, senior manager of global sustainability engagement. Through these contacts, they’ve been able to analyze the company’s current sustainable efforts, including entering power purchase agreements for renewable energy such as wind and solar and issuing green bonds. In fact, the company currently uses 96 percent renewable energy sources for operations. 

In the case study, the students are identifying both the benefits and potential drawbacks of current approaches. “We’ve found that there's actually a declining green bond premium right now, so that's making investors more conservative with the funding that they're providing,” Vuong says as an example. “That’s going to be a challenge that we examine in our case.”

With their team mix of business and engineering skills, they’re also examining novel energy solutions such as small modular reactors (SMRs), a nuclear technology that’s not necessarily scalable today but may be by the 2030s. The benefits for a data center company would be on-site energy production that is “always on” to meet the energy demands of AI with zero emissions. Equinix has previously signed agreements to use SMRs to power some of its operations.

Ultimately, the team’s case study, to be presented in final form at the end of spring quarter, will focus on three pathways to solutions: Improving energy efficiency at data centers, making the best use of power purchase agreements and similar instruments, and exploring alternative tech such as SMRs.

“For me, personally, one hope that I have for this project is that maybe someone at a higher level, maybe at the C-Suite of a company, will see that it's possible to integrate sustainability in increasing a company's growth,” Vuong says, “and that you don't just have to cut ethical practices in prioritizing that growth.”