Challenges and opportunities that will shape the data center industry: can they reach net zero?

By Elena Campbell, Consultant
08/06/202 

A data center is a physical room, building or facility that houses IT infrastructure for building, running, and delivering applications and services, and for storing and managing the data associated with those applications and services. Data centers have evolved in recent years from privately-owned, tightly controlled on-premises facilities housing traditional IT infrastructure for the exclusive use of one company, to remote facilities or networks of facilities owned by cloud service providers housing virtual operations. These centers provide the backbone to much of our economic, commercial, and social lives.

As the world becomes increasingly digital, with data playing an increasingly significant role, the data center market continues to grow. The global data center market was valued at $187.35 billion in 2020 and is projected to grow by 176% to reach $517.17 billion by 2030. The increasing digitalisation of corporate operations and the growing use of the internet has driven demand for data, providing the data center market with significant long-term growth opportunities.

However, against an ever-changing geopolitical backdrop, the European market faces challenges such as the ongoing war in Ukraine, high inflation, energy constraints, and supply chain disruption. These issues could lead to increasing costs of building and developing data centers. Europe is expected to see 15% growth, slightly higher than the global average of 13%. Investors remain confident in the market’s revenue potential and security despite these uncertainties.

Despite this, the data center industry is facing increasing pressure to become more sustainable, environmentally friendly and energy efficient. Data centers currently contribute to 2% of global greenhouse emissions – roughly equivalent to the aviation industry. Because of pushback over environmental concerns from activists and EU lawmakers, Meta abandoned plans to build a data center in the Netherlands.

Despite these challenges and concerns, the move to a more sustainable computing ecosystem is somewhat inevitable. More than 70 countries, including the biggest polluters – China, the United States, and the European Union – have set net zero targets. Technology executives and the industry at large must prepare for change sooner rather than later. This change requires a shift in the way data infrastructure is planned, designed, and built. A transition to renewable energy sources, optimum use of natural resources-energy efficient design, and cooling systems are some of the measures to build a more sustainable data center. Data center operators should also look to continue investing in key renewable energy sources to power them, such as wind, solar, hydroelectric, and geothermal. If the data center industry embraces this change, both the industry and society can benefit from long-term opportunities.