Data Center Expansion Faces Legal, Geopolitical Risks With Implications for Energy Demand

A surge in legal disputes and new exposure to geopolitical conflict are creating a complex risk landscape for global data center operators, according to a report from insurance broker Howden. For North Dakota's Bakken region, the stability and growth of this power-intensive sector is a key factor in long-term electricity and potentially natural gas demand.

The report, cited by OilPrice.com, found that large lawsuits involving data centers more than tripled, from four in all of 2021 to 14 in just the first half of 2026. The main drivers are planning and environmental disputes. Noise and nuisance complaints, including those concerning diesel generator emissions and water consumption, have become increasingly common, accounting for 78 percent of the growth in liability cases over the past three years.

This local opposition is already causing regulatory friction. In the UK, regulator Ofgem has raised alarms over speculative data center projects clogging up the nation’s electricity network. Europe has roughly 3,300 to 3,500 data centers, with Germany and the UK leading in volume.

Beyond community pushback, the sector faces a stark new threat: war. The Howden research highlighted growing exposure of data center infrastructure to geopolitical instability. In 2025 alone, data center space located within 10–15km of active global conflict zones was equivalent to around 60 percent of the total recorded across the previous five years combined. Earlier this year, five separate data centers in the UAE and Bahrain were struck by Iranian drones during the early stages of the US war in Iran, marking the first deliberate wartime targeting of commercial data centers.

"The AI boom is fuelling huge investment in data centres globally, but as our analysis shows, the risks associated with this expansion are wide-ranging and increasingly complex," said Edward Howland Jackson, chief commercial officer, global specialty at Howden. He added that navigating this landscape "requires specialist risk expertise and deep insurance market insight."

For Bakken operators and state energy officials, the data center industry represents a significant and growing source of demand for reliable, dispatchable power. Setbacks or project cancellations due to litigation or insurance challenges abroad could influence the pace of demand growth. Conversely, sustained expansion underscores the need for the baseload power that natural gas from the Bakken formation can help provide. The convergence of physical and digital risks, blurring the lines between cyber, property, and war insurance, adds a layer of uncertainty to the infrastructure supporting the digital economy.