Europe Hyperscale Data Center Market - Industry Outlook & Forecast 2024-2029

Europe Hyperscale Data Center Market - Industry Outlook & Forecast 2024-2029

The Europe hyperscale data center market by investment is expected to grow at a CAGR of 6.44% from 2023 to 2029.

KEY HIGHLIGHTS

• The Climate Neutral Data Center Pact is instrumental in making European data centers more sustainable. By 2030, all signatories to this pact commit to powering their facilities entirely with renewable energy.
• Investors in the European hyperscale data center market are exploring new locations, such as Spain, Portugal, Greece, and other countries with abundant renewable energy resources and reasonable land prices.
• Leading tech companies like Microsoft, Meta, and Google are at the forefront of developing environmentally sustainable data centers. They employ initiatives such as using sustainable materials in construction, implementing green facades, and exploring alternative energy sources such as hydrogenated vegetable oil (HVO). Colocation data center developers also follow suit.
• Austria, Romania, and Poland are significant destinations for data center development in Central and Eastern Europe. Operators in this region prefer natural gas as an energy source.
• Data center operators in Central & Eastern Europe tend to use natural gas as an energy source.

KEY TRENDS THAT IMPACT EUROPE HYPERSCALE DATA CENTER MARKET

PROCUREMENT OF AI

• The use of AI is increasingly prevalent across Europe. Governments and businesses actively take steps to harness AI's capabilities through various initiatives.
• Several countries, including Germany and the U.K., have already formulated national strategies for AI. Additionally, other countries have begun implementing tangible measures to integrate AI into their operations. In June 2022, Spain introduced an AI regulatory sandbox to test and regulate AI applications. Furthermore, Portugal's i4.0 program, based on AI technology, is designed to enhance the country's technological landscape.

Attractive Sustainability Initiatives Attracting the Data Center Operators

• The European Union (EU) consistently strives to transition energy use entirely to green sources by implementing new laws and regulations.
• The UK and France, among others, are committed to the Paris Agreement. This commitment obliges them to phase out fossil fuels as energy sources and substitute existing power capacity with renewable alternatives.
• The Climate Neutral Data Center Pact spurred data center operators to aim for 100% renewable energy usage by 2030.
• Governments throughout Europe shift to renewable energy sources, diminishing their reliance on fossil fuel-based energy. The UK government aims to transition entirely to renewable energy sources by 2035. Furthermore, Germany has set a target to reach net-zero carbon emissions by 2060.

SEGMENTATION INSIGHTS

IT INFRASTRUCTURE

• The Europe hyperscale data center market uses various server types to meet operational needs. Blade servers are popular due to their high power density and compact design, making them ideal for dense computing environments. Rack servers offer flexibility and ease of expansion and are commonly used for various enterprise applications.
• Micro servers are used in small enterprises due to their low power and space requirements. For example, in January 2023, HPE introduced the Superdome Flex 280 server, designed for high-performance applications such as SAP HANA and Oracle.
• From 2020 to 2023, the market saw a shift from 1/10 GbE switches to 25 GbE and higher capacity switches, indicating a growing need for robust networking equipment capable of supporting the high bandwidth demands of modern applications.

ELECTRICAL INFRASTRUCTURE

• Lithium-ion UPS systems, fuel cells, and natural gas generators will be implemented in data centers as operators move toward a more efficient electrical infrastructure. AWS will use HVO across all its European data centers. It has already replaced diesel with HVO in its Ireland facility. Furthermore, Microsoft partnered with Eaton to outfit all of Microsoft’s data centers with grid-interactive UPS systems.
• Efficient electric infrastructure, such as medium voltage switchgear and other equipment, is increasingly used in hyperscale data center facilities.

MECHANICAL INFRASTRUCTURE

• Most data center operators use free cooling and zero-water cooling, leveraging the region's cold temperatures. Colt Data Centre Services uses free cooling most of the year in the Paris South West data center, and the same will be used in the expansion of this data center.
• Liquid cooling is promoted across data centers. Free cooling and zero-water cooling will be less efficient than liquid cooling due to the increased workload of AI and high-performance computing (HPC) across Europe.
• Liquid cooling companies venture into Europe. In January 2023, iXora B.V. and Lubrizol partnered, where iXora B.V. will use Lubrizol’s immersion liquid in its systems.

GENERAL CONSTRUCTION

• Increased investments in hyperscale facilities will increase investments in engineering, design, and installation services as data center operators implement sustainable designs in development.
• District heating is prevalent in Europe, where data center firms transfer heat from data centers to nearby offices, residential places, swimming pools, etc. The Nordic region leads the development of district heating with data center firms. Western Europe also increased investments in district heating technology.

GEOGRAPHICAL ANALYSIS

• The Nordics and Western Europe remain top choices for large-scale investments in hyperscale data centers due to their access to free cooling and air-based cooling systems.
• Frankfurt, London, Amsterdam, Paris, and Dublin (known as the FLAPD market) are central hubs in Western Europe. However, Spain and Portugal are emerging as new destinations for building hyperscale data centers in the Europe hyperscale data center market.
• Ongoing investments in renewable energy and factors like available land and labor heavily influence decisions on where to build hyperscale facilities.
• Spain, Portugal, and Greece are attractive to investors in the Europe hyperscale data center market due to their abundant renewable energy resources and relatively lower land costs than the crowded FLAPD and other markets.
• The Western European and Nordic regions will continue to be focal points for data center development, with more companies choosing to establish their presence there.
• Major investments in hyperscale data centers are also seen in Poland, Austria, and Romania in Central and Eastern Europe. These countries push for renewable energy investments to support the power needs of data center operations.
• Real estate and private equity firms are growing interested in entering the data center market. They either establish dedicated data center business units or form joint ventures with existing data center operators to invest in large-scale projects.

Segmentation by Geography

• Western Europe
• The U.K.
• Germany
• France
• Netherlands
• Ireland
• Spain
• Other Western European Countries
• Nordics
• Sweden
• Denmark
• Norway
• Finland
• Central & Eastern European Countries
• Poland
• Other Central & Eastern European Countries

KEY MARKET PARTICIPANTS

• Microsoft, Google, and Meta are major investors in Europe hyperscale data center market in terms of cloud players.
• Equinix, Digital Realty, Vantage Data Centers, CyrusOne, and NTT are major colocation data center operators developing hyperscale facilities across Europe.
• Eaton, Vertiv, Schneider Electric, and others invest in lithium-ion-based UPS systems. These companies provide electrical infrastructure for hyperscale development across Europe.
• Eaton, Vertiv, Schneider Electric, and others supply lithium-ion-based UPS systems, smart grid solutions, and new switchgear compatible with different power sources.
• Ferrovial, Arup, RED, ISG, M+W Group, and others will see an increased demand for the development of hyperscale data center facilities.

Key Data Center IT Infrastructure Providers

• Arista Networks
• ATOS
• Broadcom
• Cisco Systems
• Dell Technologies
• Extreme Networks
• Fujitsu
• Hitachi Vantara
• Hewlett Packard Enterprise (HPE)
• Huawei Technologies
• IBM
• INSPUR
• Juniper Networks
• Lenovo
• MiTAC Holdings
• NEC Corporation
• NetApp
• Pure Storage
• Quanta Cloud Technology (Quanta Computer)
• Super Micro Computer
• Wistron (Wiwynn)

Key Data Center Support Infrastructure Providers

• 3M
• ABB
• Airedale International Air Conditioning
• Aermec
• Alfa Laval
• Aksa Power Generation
• Carrier
• Caterpillar
• Condair
• Climaveneta
• Cummins
• D’HONDT THERMAL SOLUTIONS
• Daikin Applied
• Delta Electronics
• Eaton
• ebm-papst
• EMICON INNOVATION AND COMFORT
• Enrogen
• Flaktgroup
• Grundfos
• Güntner
• Gesab
• HiRef
• HITEC Power Protection
• Honeywell International
• Johnson Controls
• Kohler-SDMO
• KyotoCooling
• Legrand
• Mitsubishi Electric Corporation
• Munters
• NetNordic
• Nlyte Software (Carrier Global Corporation)
• Perkins Engines
• Piller Power Systems
• Reillo Elettronica (Riello UPS)
• Rittal
• Rolls-Royce
• Schneider Electric
• Siemens
• Socomec
• STULZ
• Trane (Ingersoll Rand)
• Vertiv

Prominent Construction Contractors

• AECOM
• AODC
• AEON Engineering
• ARC:MC
• Ariatta
• ARSMAGNA
• Artelia
• Arup
• Aurora Group
• Atkins
• Basler & Hofmann
• BENTHEM CROUWEL ARCHITECTS
• Bouygues Construction
• Callaghan Engineering
• CAP INGELEC
• Coromatic (E.ON)
• Deerns
• Designer Group
• Dipl.-Ing. H. C. Hollige
• Dornan
• DPR Construction
• EYP MCF
• Ferrovial
• Fluor Corporation
• Future-tech
• Granlund Group
• GreenMDC
• Gottlieb Paludan Architects
• Haka Moscow
• ICT Facilities
• IDOM
• ISG
• JCA Engineering
• JERLAURE
• Kirby Group Engineering
• Linesight
• M+W Group
• Mace
• Mercury
• Metnor Construction
• MT Hojgaard
• Nicholas Webb Architects (NWA)
• Norma Engineering
• Oakmont Construction
• PM Group
• PQC
• Quark
• Ramboll Group
• RED
• Royal HaskoningDHV
• STO Building Group
• STRABAG
• STS Group
• Sweco
• TPF Ingénierie
• TTSP
• Turner & Townsend
• Warbud
• Winthrop Engineering and Contracting
• YIT
• ZAUNERGROUP

Prominent Data Center Investors

• Amazon Web Services (AWS)
• Apple
• Aruba
• atNorth (Partners Group)
• Colt Data Centre Services (COLT DCS)
• CyrusOne
• DATA4
• DigiPlex (IPI Partners)
• Digital Realty
• Echelon Data Centres
• EcoDataCenter
• Equinix
• Facebook (Meta)
• Global Switch
• Google
• Green Mountain
• Iron Mountain (IO)
• Ixcellerate
• Kevlinx
• Microsoft
• NTT Global Data Centers
• Orange Business Services
• Rostelecom Data Centers
• T5 Data Centers
• Vantage Data Centers
• Verne Global
• Virtus Data Centres (ST Telemedia Global Data Centres)
• Yondr
• Global Technical Realty
• Stratus DC Management

KEY QUESTIONS ANSWERED:

1. How many MW of power capacity is expected to reach the Europe hyperscale data center market by 2029?

2. What is the growth rate of the Europe hyperscale data center market?

3. How big is the Europe hyperscale data center market?

4. What is the estimated market size in terms of area in the Europe hyperscale data center market by 2029?

5. What are the key trends in the Europe hyperscale data center market?