Data centers are experiencing a boom

In 2020, the pandemic was an important catalyst to accelerate digitization. In this way, the increased dependence on data centers and, by extension, on telecommunications infrastructure, has come to stay, causing a great boom in the sector. In the case of Spain, the Spain DC association hopes that in the next five years it will attract direct investments in physical infrastructure worth 5,000 million euros, while the Community of Madrid has recently announced that it will receive investments of 680 million euros in new data centers in the coming years.

These good expectations also carry important challenges. If in recent decades there has been work on efficiency, so that the data centers have remained at stable demand levels despite processing much more information, this room for maneuver is increasingly reduced. While society continues to increase its demand and generation of data, concern about combating climate change is growing. Eaton, a leader in energy management, collects in the study Data Centers and decarbonisation published in collaboration with BloombergNEF, that by the end of 2021 the energy demand of data centers in five key European markets will stand at 3.0GW.

Data centers will attract direct investments in physical infrastructure worth 5,000 million euros

With this complex context, Eaton analyzes the predictions and trends in the data center sector for the coming months.

Data centers in the framework of energy transformation

This seemingly contradictory dual objective of increasing their capacity while reducing their energy consumption, It will be the one that guides the data center sector in the next five years. If, in addition, we take into account that other industries are immersed in their electrification process, it is to be expected that the demand for electrical energy will skyrocket and make it difficult for data centers to access production.

One of the solutions is to increase and integrate renewable energy production, not only to meet new demand, but also to displace current fossil-based production. Own energy operators they will also be forced to increase supply and, at the same time, decommission fossil fuel plants.

Governments setting the rules and direction of energy markets will have to make complex and far-reaching decisions about how energy is produced and managed, and who is given priority for consumption.

The challenge of data centers from now on will no longer be that of efficiencybut that of sustainability. New metrics, new approaches to data center design and operations will come under increased scrutiny.

“Society depends on data, data depends on energy, and a significant gap will soon emerge between the wants and needs of the population, attracting investments and innovation. In the case of the network, this gap will allow both new and existing private companies to contribute to the development of much-needed renewable energy”, says Ricardo Ambrona, head of marketing for Data Center at Eaton Iberia.

An opportunity to align data and energy

A seller’s market for energy supply opens the door to new approaches and models. In the case of data centers, it will consolidate the economic arguments for a new relationship with energy, which places them not only as consumers, but as infrastructures that support the network with energy services, storage and even power generation.

“Data and energy will realign, and in some cases, that alignment will also become a physical proximity to improve the development of the country. When the economy and regulation move in the same direction, there will be reasons for data centers to switch to providing flexible supply directly to the grid in a sustainable way”, continues Ricardo Ambrona.

The sector coupling or “coupling of sectors”, therefore, could become one of the main headlines for the data center industry in the coming months. By the end of 2022 and beyond, the dots between data and energy will have truly been redrawn and hopefully merged, and businesses structured to make data centers part of the solution to the transition to data centers will continue to grow. renewables in a sustainable and profitable way.