The market for data centres in EMEA is expected to grow annually by 5.5% to reach $65.66 billion by 2027. This growth is driven by the massive demand for data storage and processing as we all live increasingly digital lives. COVID lockdowns enforced radical and rapid changes in the way people work and socialise online, creating huge boost for hybrid and online work as well as streamed entertainment and social media. As we emerge from the crisis these changes will not only remain but accelerate.
New demand, emerging markets
This means there is unprecedented need for more data centre capacity closer to people who want to use digital services. App developers, streaming services, cloud providers, public sector organisations, transport and mobility innovators, to name but a few, want to digitally serve populations across EMEA and increasingly require facilities across the region.
At the same time, traditional data centre locations such as Frankfurt, London, Amsterdam, Paris and Dublin (FLAP-D) are beginning to feel the strain of development. These early adopter cities sat in a “sweet-spot” of proximity to dense populations of (mainly) enterprise customers, good connectivity to high-speed internet cables, and availability of power and land. They attracted digitally savvy workforces and received financial incentives from governments keen to invest in digital industries. However, they are now becoming victims of their own success. Suitable land is hard to find and expensive to acquire, and grid limitations are impinging on the availability of power in these areas.
At the same time, accelerating digitalisation is diversifying and widening the potential market as more business and consumers look to use cloud-based and digital services. This is a time of opportunity, but for “emerging markets” there often remain disconnects between operators and local stakeholders that can lead to push-back on development plans. Local government, energy generation and distribution firms in emerging markets can be less experienced with data centre businesses. We need to work harder to ensure there is understanding of the role of data centres, how they operate, and the potential they bring to local communities.
Expanding the Nordic Model
In the EMEA data centre sector, the term “emerging markets” applies to anywhere outside of the core FLAP-D areas. Statistics from Cloudscene show that data centres are still highly concentrated. The UK and Germany lead with nearly 500 in each country, followed by the Netherlands (280+) and France (260+). Ireland lags as a country with only about 50, but nearly all of these are in Dublin, catapulting that city into the group of most concentrated data centre locations.
Over the past five years, the Nordic region has emerged as one of the most exciting new destinations for data centre hosting. Growth has been accelerated by a potent combination of cool climate, plentiful, low-cost, green hydro-electric electricity and pro-business, stable governments offering tax incentives. A digitally advanced population provides a large market for digital services, and an accessible pool of skilled workers.
In western Europe, Italy is also rapidly establishing itself as a key destination for hyperscale cloud providers and multinational digital leaders. The recently created Italian Data Center Association is evidence both of a critical mass of operators, and of increasing ambition to organise, promote, and create strong foundations for data centre growth in the country. Switzerland is leveraging its unique geographic situation, as well as plentiful sustainable hydro power, and connectivity to key markets East, West, North, and South.
Hyperscaler-drive, locally delivered
But what do all these emerging regions have in common? There is a small set of critical factors. The first, and most important, is the role played by hyperscalers. These global cloud service providers drive the market for online, digital, and virtual experiences. As communities demand these services, hyperscalers need to locate servers and storage close by.
Fleet of foot data centre operators must find and acquire suitable land, ensure high-grade power supply, and high-speed connectivity to meet this demand. To win in emerging markets requires technical capability, local knowledge, connections, and deep understanding of political and business environments. A cookie-cutter approach does not work well.
Today, we blend global best practice in design, build, and operation of facilities with local knowledge. Teams include local experts who have spent years developing and operating critical infrastructure in their regions. They know the regulations, they know the sites, and they know how to orchestrate the many different parties needed to secure, develop, and operate a data centre in their specific market.
What this means for hyperscalers, and indeed for any client, is that they can get the facility they need, where they need it, fast. Speed is of the essence, but so is creating a facility that meets the specific needs of the client. “Build to suit” combines standardised elements, proven construction, commissioning, and operations best practices, with the flexibility to meet specific requirements.
True sustainability – wins for everybody
But to be truly sustainable, we have to think beyond our immediate client. Data centres are the infrastructure of the digital economy, but they must also deliver value to the people, businesses, and communities that exist in the real world around them. Modern data centres minimise the impact on local environments, for example by using renewable energy, harvesting rainwater to reduce impact on potable water supply, and feeding heat into local municipal systems to warm homes and businesses in the area, creating a sustainable, circular economy.
We also want to create hubs of enterprise that stimulate local economies in these emerging markets. Data centres create high-skill career opportunities directly. Working with local schools and colleges, data centre providers can promote opportunities and offer future-proof career paths.
To help emerging markets capitalise on the opportunity of digital transformation, we must keep these wider impacts front of mind and deliver growth that is a win for digital consumers, a win for hyperscalers looking to reach new markets, a win for local communities, and a win for the planet.
