The profound impact of cloud computing and artificial intelligence (AI) has catalysed an unprecedented surge in data centre demand across the European continent. As these pioneering technologies pervade every facet of modern life, unveiling new realms of innovation and operational efficiency, an insatiable appetite for robust data processing and storage capabilities has emerged.
Underpinning this seismic shift, a staggering 54% of industry leaders cite cloud computing as the primary driver propelling the meteoric rise in data centre investments. That is according to RLB’s Data Centre Trends Report of 2024, which finds that closely following suit, AI has emerged as an equally potent force, commanding 53% of the industry’s focus, underscoring its pivotal role in shaping the digital landscape.
Amid this unrelenting wave of technological progress, data centre operators across Europe are poised to commission an astonishing 65% more capacity in 2024 than the previous year. This translates into a projected deployment of 26.4 megawatts (MW) of new data centre infrastructure, a remarkable escalation from the 16MW unveiled in 2023.
Echoing this burgeoning demand, construction contractors are gearing up to erect an additional 61% data centre capacity in 2024, equating to 22.5MW, a substantial leap from the 14MW erected in the preceding year.
However, this exponential growth trajectory is not without its challenges. Industry stalwarts acknowledge that the critical path to delivering new capacity is no longer dictated by construction timelines but rather by the extended lead times for procuring essential equipment and components.
As the data centre sector navigates these uncharted waters, a formidable adversary looms on the horizon – supply chain disruptions. A staggering 61% of industry leaders anticipate an escalation in supply chain risks throughout 2024, with contractors bearing the brunt of this apprehension at 65%.
The ramifications of these disruptions are multifaceted, encompassing increased environmental regulations (60%), geopolitical instability (56%), and the tangible perils of climate change (57%). Collectively, these factors pose a formidable threat to Europe’s digital transformation, with 70% of respondents concurring that supply chain bottlenecks and interruptions will impede the continent’s digitalisation over the next five years.
The Spectre of Inflation
Exacerbating the challenges, the spectre of inflation continues to cast its shadow over the data centre landscape. A sobering 75% of industry stakeholders anticipate that component prices will not revert to pre-pandemic levels until 2026 or beyond.
This grim outlook is further compounded by the escalating costs of fabricated and installed components. For instance, a disconcerting 56% of respondents foresee a surge in piling prices, with 15% bracing for an increase exceeding 5%.
The narrative is equally daunting for infrastructure components, with over half of the industry anticipating price hikes across various segments, including medium and low-voltage switchgear.
Amidst this tumultuous landscape, the data centre sector’s commitment to sustainability has emerged as a beacon of hope. Industry leaders have prioritised the pursuit of power consumption efficiency (61%), carbon emission reduction (59%), and minimising embodied carbon (49%) in their facility design endeavours.
However, the implementation of these noble aspirations has yet to gain substantial traction. Merely 40% of operators have embraced on-site renewable generation, while a mere 37% have scrutinised their suppliers’ climate performance, and a paltry 31% have actively measured and mitigated embodied carbon.
In response to the mounting supply chain pressures, a significant 35% of operators have curtailed the number of planned data centres, while a staggering 59% of contractors have been compelled to decline projects.
Recognising the urgency of the situation, 66% of contractors and 59% of operators have embraced contractual mechanisms to share risk, fostering a collaborative approach to weather the tempestuous climate.
Moreover, two-thirds of industry stakeholders acknowledge the imperative to rethink the very essence of data centre design and construction methodologies, aligning them with the prevailing supply chain constraints.
The AI Enigma
As the AI revolution continues to unfold, a veil of uncertainty looms over its precise impact on the data centre sector. A pressing 62% of operators rank ‘meeting the needs of AI computing infrastructure’ among their top five design priorities for 2024, underscoring the urgency of this conundrum.
The energy and cooling requirements of AI workloads remain a perplexing puzzle, with industry veterans likening the endeavour to a “guessing game.” Nonetheless, operators are actively embracing liquid cooling solutions, anticipating a shift from the current 58% reliance on conventional cooling methods to a predominant adoption of immersion cooling by 2030.
This transition, while promising water conservation benefits, will further intensify the demand for power, potentially escalating power densities from the current 4 kilowatts per square metre to a staggering 8 kilowatts per square metre, amplifying the urgency for sustainable energy generation.
Amidst this climate of uncertainty, industry leaders are prioritising flexibility as the guiding principle for their data centre strategies. The current lack of clarity has fostered a culture of “optionality,” enabling operators to adapt swiftly to the evolving AI landscape.
While the answers to these intricate questions are expected to crystallise within the next three years, operators who delay their AI initiatives risk missing the proverbial boat. Embracing agility and responsiveness is paramount to capitalising on the AI opportunity.
Talent Cultivation
Recognising the pivotal role of human capital in this transformative journey, industry leaders are actively collaborating with educational institutions to cultivate the next generation of data centre professionals.
Drawing inspiration from the oil and gas sector’s successful talent acquisition strategies, companies are engaging with universities and colleges, offering clear career progression pathways and nurturing talent from the grassroots level.
This proactive approach not only addresses the immediate skill gap but also lays the foundation for a sustainable talent pipeline, ensuring the data centre sector’s resilience and adaptability in the face of future challenges.
As the data centre sector navigates the turbulent waters of supply chain disruptions, escalating costs, and the enigmatic AI revolution, one truth emerges – change is the only constant. Embracing this ethos, industry leaders are actively recalibrating their strategies, fostering collaboration, and prioritising sustainability as they strive to unlock Europe’s AI prowess.
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