Data Center Modularization: The Fastest Path to AI-Ready Power
Modularization can cut data center deployment time by 30%–60% while easing the electrician shortage. Its greatest economic impact, however, is that it shifts value toward the sale of integrated modules: by halving a conventional 30-month construction schedule, every gigawatt (GW) of capacity can generate an additional US$900 million in net present value (NPV), of which electrical OEMs capture more than 20%. AI's appetite for compute will not wait for the grid, and construction sites cannot wait either — factory-prefabricated "power boxes" and "IT boxes" are the fastest route to market.
Modularization Has Suddenly Become Highly Sought After
US grid interconnection timelines have stretched from 1.5 years to more than five years. Unable to wait, developers are increasingly building their own behind-the-meter power supplies, temporarily plugging the bottleneck with diesel generators and fuel cells. This creates a new chokepoint: on-site construction.
- A typical data center takes 18–24 months from groundbreaking to energization, of which MEP (mechanical, electrical and plumbing) work accounts for more than 15 months.
- The new 800V architecture adds a further 50% to MEP labor hours — and much of this work happens in rural areas where skilled workers are scarce.
- Modularization relocates integration to manufacturing hubs such as Dallas–Fort Worth, home to some 85,000 workers, cutting labor hours by 37%.
Citing Schneider Electric's data, traditional construction takes 88 weeks from design to commissioning, versus only 34 weeks for a modular approach; Vertiv, meanwhile, can compress 70 weeks down to 10.
Buying Parts or Buying Systems?
The single biggest economic effect of modularization is that it rewrites procurement logic. In the past, developers sourced parts from five or six different suppliers and EPC contractors assembled them on site. Today, OEMs buy a prefabricated power module or IT module with 80%–90% internal integration; orders become larger and faster, revenue per MW rises, and customers increasingly prefer single-source procurement.
Bernstein estimates that if modular penetration rises from 40% to 60%, integrated vendors (Schneider Electric, Vertiv and Eaton) could capture roughly three additional percentage points of market share. Companies that sell only components without a modular solution — such as ABB, Siemens and Legrand — risk being marginalized.
The Industry Majors
Players fall into two camps — integrators and specialists. Three integrators stand out:
| Vendor | Position | Strengths | Watch-outs |
|---|---|---|---|
| Schneider Electric | Steady | Largest customer case base and product coverage; prefabricated capacity expanded 270% in two years; manufacturing partnership with Foxconn | IT module cabinet power capped at 1.2 MW — relatively conservative |
| Vertiv | Aggressive | SmartRun IT modules reach 6.2 MW; OneCore architecture scales from 12.5 MW up to a 1 GW campus | Moving too fast; Q2 earnings profitability looked weak |
| Eaton | Catching up | Filling out its modular portfolio through the Fibrebond acquisition and an investment in Flexnode | Clearly less mature than the top two; needs more time to prove itself |
What these three have in common is that they can supply both power modules and IT modules — and IT modules are the scarce commodity. Most vendors can only prefabricate the power side, yet how fast a data center actually comes online depends on modularization on the IT side.
Cost
The time saved by modularization translates directly into money. Using ABB's pre-design solution as an example:
| Scenario | Construction Time | NPV per GW |
|---|---|---|
| Traditional build | 30 months | US$5.76 billion |
| Pre-design | 15 months | US$6.66 billion |
The US$900 million difference comes from revenue generated by going live earlier. How much can OEMs capture? Assuming they capture 25%, that is roughly US$220 million per GW. Given that the total addressable markets for power modules and IT modules are US$1.9 billion and US$1.8 billion per GW respectively, the incremental value is substantial.
Factory assembly also directly reduces labor costs: for a 100 MW project, MEP labor can fall from US$75 million to US$47.6 million — a 37% saving.
Outlook
- Modular penetration will keep rising. About 40% of new projects already use some form of modularization, and this is expected to reach 57% by 2030. Non-hyperscale customers (such as Neocloud and colocation providers) will move even faster — they simply cannot afford to wait.
- Some 52% of respondents say future AI deployments will use both power and IT modules. Only Vertiv and Schneider Electric currently offer a complete, integrated IT-module-plus-cooling solution; rivals either lack an offering or must partner to fill the gap.
The next battle in AI data centers will be fought over the speed and integration of power delivery.
