Orbital Data Centres Cost Three Times More Than Ground-Based Alternatives Says Wood Mackenzie

A hypothetical 1 GW data centre in orbit would cost an estimated US$170 billion, more than three times the equivalent facility on the ground, according to new research from Wood Mackenzie that examines whether space-based computing can address the mounting constraints facing terrestrial data centre expansion.

The report comes as global data centre power demand reaches 460 TWh in 2026, equivalent to half of Japan’s total power generation. Wood Mackenzie forecasts that figure will reach 1,280 TWh by 2030 and 3,700 TWh by 2040, a 703 per cent increase from current levels growing at 16 per cent per year.

The United States and China together account for 78 per cent of the global planned data centre pipeline.

AI Agents Driving Compute Demand

The scale of the demand challenge is being driven by the next generation of AI systems. Wood Mackenzie’s research found that the next generation of AI agents could consume between 10,000 and 40,000 times more computing power per task than today’s chatbots.

That pressure is pushing some of the world’s largest technology companies to consider putting their data centres in space, but the economics remain a significant barrier.

For a 1 GW orbital data centre, launch and satellite costs account for approximately 60 per cent of the estimated US$170 billion price tag. Bringing orbital costs to parity with terrestrial alternatives would require a 70 per cent reduction, which the report noted is achievable only if the historical trend of exponential cost declines in space launch continues.

Terrestrial Constraints Are Real

On the ground, the planned data centre pipeline is running into practical constraints that are proving difficult to resolve.

Grid connections in the United States can take up to seven years. Gas turbine equipment faces long wait times through 2030. In dry regions, cooling systems are competing for limited water supplies. Construction costs are rising from higher labour and material expenses.

Wood Mackenzie concluded that these bottlenecks are driving serious exploration of orbital data centres as an alternative, even though the cost gap remains wide.

Robert Liew, Research Director at Wood Mackenzie, acknowledged the constraints but emphasised the scale of the cost disparity.

“The constraints on terrestrial data centres are genuine, and they are not going away quickly,” Liew stated.

“But putting a data centre in orbit still costs at least three times as much as building one on the ground. That gap does not close without sustained and dramatic progress on launch costs.”

$9 Trillion In Terrestrial Investment Forecast

Despite interest in orbital alternatives, spending on terrestrial capacity has not slowed. Wood Mackenzie forecasts US$9 trillion in cumulative capital expenditure between 2026 and 2040 to build approximately 395 GW of new terrestrial data centre capacity under its base case.

“We forecast US$9 trillion of terrestrial data centre investment between now and 2040. That is where capital goes first,” Liew argued.

“Orbital data centres are a serious long-term proposition, but right now they remain a bet on the cost curve.”

The scale of terrestrial investment is already visible. Anthropic recently committed US$45 billion over three years to SpaceX for access to its 300 MW Colossus 1 terrestrial data centre, deploying 220,000 Nvidia GPUs.

Wood Mackenzie’s base case energy transition outlook does not include large-scale orbital data centres, and no gigawatt-scale orbital or terrestrial facility currently exists. The report concluded that terrestrial build-out will be driven by necessity, while orbital data centres remain a technology preference rather than an economic reality.

Launch Costs Have Fallen But Need To Fall Further

There are signs that the cost trajectory for space launch could support orbital data centres in the longer term. Global orbital launch attempts reached 324 in 2025, a 25 per cent increase over 2024, with commercial operators conducting 70 per cent of those attempts.

Launch costs have already fallen approximately 90 per cent with current-generation reusable rockets compared to their expendable predecessors. A record 4,517 satellites were deployed into orbit in 2025, 58 per cent more than the previous year, with 87 per cent owned by private entities.

The commercial space industry’s growth has been rapid, but the scale required for orbital data centres represents a different order of magnitude from current satellite deployment operations.

SpaceX And xAI Dominate Orbital Plans

SpaceX and xAI have announced plans to put 100 GW of orbital computing capacity into space annually, a figure ten times the combined pipeline of every other orbital data centre developer globally.

Non-US companies account for less than 0.5 GW of total planned orbital capacity, reflecting how concentrated this emerging sector is among US-based firms. Despite the higher costs, launch activities across the top five companies are expected to begin accelerating between 2027 and 2028.

The dominance of US firms in the orbital data centre pipeline raises questions about the geopolitical implications of space-based computing infrastructure, particularly as countries seek to maintain sovereignty over data processing and storage.

The Scale Of The Power Challenge

The underlying driver for exploring orbital alternatives is the sheer scale of power demand growth. Moving from 460 TWh in 2026 to 3,700 TWh by 2040 represents a transformation of the global energy landscape.

For context, 460 TWh is equivalent to half of Japan’s total power generation. Reaching 3,700 TWh would require data centres to consume power equivalent to the total electricity generation of several major economies combined.

The 16 per cent annual growth rate in data centre power demand is being driven by AI workloads that require significantly more compute per task than previous generations of software. As AI models grow in complexity and AI agents take on more autonomous operations, the compute requirements per interaction are increasing by orders of magnitude.

The constraints this creates are not limited to power generation. Grid infrastructure, water availability for cooling, land use and construction supply chains are all under pressure from the scale of planned data centre expansion.

Whether orbital data centres can eventually become economically viable depends on whether launch costs continue their historical decline. The 70 per cent cost reduction needed to reach parity with terrestrial facilities is significant, but the space launch industry has already demonstrated the capacity for dramatic cost improvements over the past decade.

For now, Wood Mackenzie’s assessment is clear: the US$9 trillion terrestrial investment pipeline is where capital will flow first, with orbital data centres remaining a long-term proposition contingent on continued progress in space launch economics.

Last Updated on June 18, 2026 by Nick Ross