Does the UAE Have an Advantage in Building Data Centers?

American hyperscalers are increasingly exploring building data centers in the UAE, but it is unclear whether doing so is intrinsically cheaper than building in the United States. This report compares the costs of building and operating a hypothetical 100-MW data center in the US and the UAE. The analysis indicates that total costs are similar, although there are differences in specific costs. Given sparse public data – especially as no 100-MW+ data centers have yet been built in the UAE – these estimates are best treated as provisional. For example, in part due to data scarcity, the model does not account for differences in time to connect especially large data centers to the grid. However, if the total cost estimates are roughly correct, they suggest current hyperscaler interest in the UAE is not driven by an intrinsic cost advantage. Interest may instead be driven by factors like subsidies, expectations of future cost declines, business opportunities unlocked by investments, or a desire to hedge against US delays. This report’s estimates indicate that the US maintains structural advantages in data center construction, including (perhaps counterintuitively) cheaper energy, a more hospitable natural environment, and a robust domestic data center industry, with its primary disadvantages being higher building construction costs and permitting delays.

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