Europe Data Center Power Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023-2028)

The Europe Data Center Power Market is expected to grow at a CAGR of 7.4% during the forecast period. Growth in the number of data centers in the region is leading to an increase in electricity demand and the emergence of a new electricity-intensive industry. In addition, other key factors driving the Europe data center power market are the increased number of IT infrastructure components, increasing digitalization, and an increasing number of cloud service providers.

Key Highlights

• The spread of COVID-19 negatively affected significant regional data center operations. Some countries, such as the UK, Germany, the Netherlands, France, and Ireland, were impacted most, as many governments halted their construction work in the year's first half. For instance, the government of France stopped all non-essential construction projects to avoid spreading the virus.
• Post-pandemic, the region has been witnessing strong growth with an increase in efficient power infrastructure spending, shifting old, outdated data centers to modern facilities. According to the EU, by 2030, data centers in Europe are expected to account for 3.2% of electricity demand within the EU, an 18.5% jump from 2018. In coming years, the market is expected to generate 30 times more data with an increased number of servers, leading to higher energy consumption.
• Many European policymakers have identified data centers as one of the fastest-rising sectors regarding energy consumption. European policymakers have formulated an EU code of conduct to inform and encourage data center operators to reduce energy consumption cost-effectively without impacting the critical functionality of data centers. Such factors are further expected to drive market growth.
• Further, increasing renewable energy procurement is analyzed to drive Europe's data center power market. To ensure data centers are an essential part of the sustainable future of Europe, data center market vendors and trade associations have agreed to make data centers climate-neutral by 2030. European cloud and data center operators, including Interxion (Digital Realty), OVHcloud, Equinix, Scaleway Datacenter, Aruba, and other industry associations, have signed the Climate Neutral Data Center Pact.
• However, the current spike in energy prices and disruptions to the energy supply in European countries is raising challenges for data center operators, which are simultaneously experiencing a drastic increase in demand for data processing, traffic, and storage since the pandemic. While data center power demand is rapidly increasing, power availability is increasingly lacking. Such factors can limit the growth of the data center power market in the region.

Europe Data Center Power Market Trends

Rising Adoption of Mega Data Centers and Cloud Computing is Expected to Drive the Market

• The growing adoption of cloud computing services in European countries has led to increased IT infrastructure components. Many technology companies are launching their cloud services and helping many businesses in their digital transformation journey, thus driving the demand for the Europe data center power market over the forecast period.
• Further, the demand and adoption of cloud computing services are growing at a rapid pace, thus, indirectly benefitting the market's growth. For instance, according to the data from Eurostat, the use of cloud computing services in EU businesses increased from 36% in 2020 to 41% in 2021.
• Moreover, the rapid adoption of cloud services and rising penetration of connected devices are driving the data center market to new records, including consolidations and the emergence of new players. Such instances will positively impact the market's growth. For instance, in March last year, Carrier-neutral colocation provider Telehouse Europe opened its fifth colocation data center in London. Located in the Docklands, the new Telehouse South delivers 2 MW of power and space for up to 668 racks of IT equipment.
• Further, several data center infrastructure is located close to the most significant European internet exchange points, i.e., Frankfurt, London, Amsterdam, Paris, Zurich, Stockholm, and Madrid. Moreover, there has also been considerable data center investment growth in other regions of Europe, e.g., close to carbon-free energy resources or in areas with perfect climate conditions to run data centers.
• Moreover, due to the vast resources of renewable energy, low power prices, favorable climate conditions, and good infrastructure, Nordic countries have added to a surge of foreign investments in the region over the years. For instance, Lefdal Mine Datacenter is a unique mountain hall facility on the west coast of Norway with a water-based cooling system, allowing 10 KW/rack with a PUE of less than 1.15, which is an ideal facility to meet the current and future demands.

Germany is Expected to Hold Significant Market Share

• Germany is expected to drive the data center power market significantly over the forecast period, owing to the availability of many data centers, cloud service providers, and network fabrics. Further, rising power consumption by data centers has increased operational costs; thus, data centers in the country are focusing on implementing highly efficient data center power solutions.
• Germany is often cited as the European country with the highest data center energy consumption. It also has the most significant data center market, holding approximately 25% of Europe’s total capacity. As a result, energy security and availability are also becoming issues for European data centers.
• For instance, as per data from the Cloudscene, there are 495 German data centers as of last year, and most of these colocation facilities are located in and around Frankfurt. Further, there are 129 data centers in Frankfurt, followed by 52 in Hamburg and 51 in Munich. Such a high number of data centers is expected to create high demand for efficient data center power solutions in the country over the forecast period.
• In addition, the regional manufacturing and automotive sector are also emerging as a critical integrators of AI, IoT, and other advanced technologies. Further, various other end-user industries are also adopting cloud computing solutions. Implementing cloud computing and advanced data management and monitoring technologies will significantly drive the demand for the installation of data center power equipment.

Europe Data Center Power Market Competitor Analysis

The Europe data center power market is moderately concentrated due to higher initial investments and low availability of resources. It is dominated by a few major players like Schneider Electric SE, Fujitsu Ltd, Cisco Technology Inc., Eaton Corporation, and ABB Ltd. These major players, with a prominent share in the market, focus on expanding their customer base across foreign countries. These companies leverage strategic collaborative initiatives to increase their market share and increase their profitability. However, with technological advancements and product innovations, mid-size to smaller companies have increased their market presence by securing new contracts and tapping new markets.

In November 2022, French industrial firm Legrand announced the acquisition of the UK's uninterrupted power supply (UPS) provider, Power Control. Power Control provides UPS products and industrial power systems, generators, and batteries to several industries, including data centers. The acquisition would allow Legrand and Power Control to help customers ensure they have proper UPS and other mission-critical power solutions to meet potential supply volatility over the coming months.

In June 2022, Microsoft announced signing a deal with Ireland-based Eaton that will make its data centers' backup power supplies systems part of the electricity grid, supporting the integration of renewable energy sources. Microsoft said it would use the smart UPS systems in key markets and participate in grid-stabilizing initiatives.

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