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Second-hand electrical equipment use in data centers raises insurance risks

A surge in U.S. and global data center demand, driven by AI and cloud, is pushing some projects toward used and refurbished power equipment, complicating operational resilience and insurer liability.

Reported · Written up by our desk · Property Insurance

Insurance Journal warns that as data centers accelerate across the U.S. and globally, a less visible supply chain risk is growing, namely the increased use of second-hand, refurbished, and older electrical equipment in critical infrastructure projects. The outlet frames this as a governance and operational resilience issue that can quickly create material financial consequences for both developers and insurers.

The piece links the trend to demand for data centers fueled by artificial intelligence and cloud computing, along with ongoing migration to software-as-a-service and the Internet of Things. It cites Program’s report, Measuring the Data Center Boom: Facts and Statistics (2026), saying 11,426 data centers are in operation across 79 countries, with the U.S. accounting for 4,280.

It also points to constraints in existing utility systems and contract dynamics, including cases where utility firms enforce higher rates and restrictive terms such as forward purchasing power regardless of whether it is ultimately used. As a result, data center operators increasingly install their own power supply systems, using utility-scale generation and grid components such as combustion gas turbine generator sets, large transformers, and high voltage electrical switchgear.

With manufacturing capacity for some equipment already stretched, developers may not be able to wait, the article says. It describes unconventional sourcing routes including “grey” markets not tied to an original equipment manufacturer, or old stock from cancelled orders, and argues that these channels can obscure whether equipment is fit for service and reliable, increasing risk for project insurers.

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