Pieter Schaap, Director at Soben, considers some of the biggest developments happening in the data centre sector, and their implications for the future.
Those fighting to meet the rising demand for new data centres are delivering construction projects in the face of multiple constraints. Power, skills, soaring material costs, and lead times that refuse to return to pre-Covid standards, to name a few. But while other sectors are still wrapping their heads around standardisation, sustainability and digital construction, the data centre sector is just getting on with it. Because it has to.
It’s shaping up to be a golden era for the sector, as the leading players spearhead solutions to power challenges, introduce groundbreaking cooling technologies, and revolutionise data centre design.
AI creates excitement and uncertainty
Topping every industry commentary is the unstoppable rise of artificial intelligence (AI). Forecasters might not be able to agree the scale, but there’s no doubt the growth will be significant. Demand for space has already begun. Google’s recent announcement of a $1 billion (£0.79 billion) investment in the UK came hot on the heels of news that Microsoft plans to invest £2.5 billion over the next three years to build artificial intelligence infrastructure in the country.
It’s not just traditional locations that will benefit. One of the more exciting consequences of the rise in demand for AI and high-performance computing (HPC) data centres is a shift away from traditional hotspots. The Nordics and even Scotland are up for consideration thanks to their access to land, plentiful renewable energy, cooler climates, and welcoming business environments.
AI isn’t just increasing capacity demands. Data centres built for high-performance computing and AI will be different from their standard cousins. Higher density applications will generate more heat, which requires a change in cooling philosophy working within the same power constraints. There are plenty of solutions for this on paper, but very little are actually already in use. And that’s creating chaos for construction plans – from accelerated schedules to mid-construction specification changes. Everybody sees it coming, but, for now, we’re balancing the excitement with uncertainty.
Luckily there are some innovative players, like ARK, KAO and Kevlinx, that are paving the way for others by launching AI ready facilities in the coming period.
Cooling technologies advance
With AI comes the industry’s other hot topic – cooling. Cooling technologies are set to advance rapidly, creating uncertainty for those looking to procure equipment early for upcoming projects. The difficulty is that you can only work with what you know, so developers need to be decisive, whilst aware of the risks. It’s important to design adaptable facilities, whether that’s future-proofing with additional pipework for direct-to-chip options, or building in flexibility up-front for different cooling options, such as immersive solutions.
Cooling manufacturers have not been sitting idle. Ixora, GRC, Submer and Asperitas, amongst others, are continuously developing more efficient technologies. These are providing the much-needed economical benefits in terms of cooling to clients, whilst also proving to be sustainable – ensuring an excellent basis for optimised PUEs.
Fresh thinking to solve power problems
One topic that remains at the top of everyone’s worry list is power – or the lack of it. We’re seeing power-related delays across the globe – from Berlin to Brazil. In Europe, governments urgently need to invest in increasing generation and transmission capacity to ensure a network that is fit for purpose. Power purchasing agreements between operators and renewable energy suppliers are becoming more common, but they won’t fix the immediate challenge of increasing power demand.
While governments start to recognise they need a more strategic approach to powering the world’s data centres, the industry is shifting its attention away from established markets to new locations with better power availability. Madrid, Rome, Barcelona, Zurich, Warsaw and Vienna are all tipped for strong growth in Europe, alongside new North American locations Reno, Nevada and Charlotte, North Carolina, and even Canada.
While other industries are slowly waking up to the ethical requirement to shift to renewable energy, for data centres it is part of the solution. In the short term, this is playing out in a surge in power purchase agreements (PPAs), such as recent agreements between Equinix and Sonnedix in Portugal, Google and Eneco in the Netherlands, and Digital Realty and Engie in Germany.
To address the power availability problem, future developments will adopt a mix of renewable and low-carbon energy. In the medium term, nuclear power might become a viable option. We’re already seeing proposals for small modular reactor (SMR) plants to supply the industry from companies including NuScale, Oklo, Rolls Royce, Last Energy, BWX Technologies, Kairos Power and X-energy.
Supply chain innovation
Technical constraints aren’t the only challenge to keeping up the pace of construction. As demand increases, the availability of people and companies with the right skills and experience is in decline, from experienced general contractors to construction management professionals. As a result, we’re seeing general contractor costs rising by as much as 40% in some parts of the US. Meanwhile in Europe, data centre developers are looking outside their established circle of general contractors with newcomers including Glencar and Strabag joining those who have recognised the size and scale of the opportunity.
Equipment and material lead times might not be as bad as at the height of the pandemic. But we’re still seeing procurement issues on some mechanical and electrical equipment, critical power systems, and structural elements.
A more strategic and proactive approach is needed to prevent equipment bottlenecks halting projects. Owner furnished contractor installed (OFCI) items, where the project owner buys critical equipment and materials directly from the suppliers to sometimes even supply a multi-year pipeline of projects, is increasing in popularity.
It allows standardisation and de-risks complete project portfolios. It does present challenges though, whereby some operators are storing items off-site until they’re ready for them and others taking a portfolio approach – taking equipment from one project to keep another moving. We’re even seeing some larger subcontractors preordering equipment in anticipation of being awarded contracts. The key here is flexibility and forward planning.
Shaping the future
The explosion in data use is great news for the industry. But the sector must adapt fast as demand for space continues to ramp up in the face of constraints on power, land, skills, straining global supply chains and constant technological change.
As the world hurtles towards a digital future and grapples with the urgent shift to renewable energy sources, data centres are not passive observers but integral drivers of change. The industry has a pivotal role to play, not only in responding to economic challenges, but creating the solution.
As a microcosm of the wider construction industry, data centre leaders have a role in shaping the global landscape – a driver of innovation, and a catalyst for transformative solutions.
