After a record 2022 with well over two gigawatts absorbed globally and an ever-growing slate of new markets growing to primary stature, the data center industry is looking ahead with excitement for 2023 and beyond. While recent industry events have displayed overwhelming bullishness for continued growth expectations, there will be nuances regarding how this growth will occur going forward.
While the vast majority of large enterprises and government agencies have largely moved off-premises, there are continued questions of fit and efficiency; many large organizations find themselves working across multiple-cloud scenarios, along with some workloads still residing in a colocation environment, and even some minor instances on-site. The question is not whether to migrate but how to make all this work as smoothly as possible, with the least amount of downtime and the highest level of security. This “Great Optimization,” as it has been referred to, extends to geographic placement of workloads as well; is sub-five millisecond latency truly needed for all uses? Might it make sense to place some of this in a location with entirely renewable energy? The calculation of speed, efficiency, and carbon footprint will be a continued story from this year onward and one that will require continuous review.
The Power Equation
As power becomes increasingly constrained in many primary and growing markets, relationships with utilities will be paramount to ensure the timely launch of new phases of development. This may include sharing a growing cost burden with these organizations, from on-site substations to assisting with high-voltage lines and renewable power purchasing agreements outside the immediate area. In addition, with the industry moving closer to an array of self-imposed deadlines for climate neutrality from operators and major cloud services alike, the method of power generation for large campuses will be under increasing scrutiny for the rest of the decade. While some of this power infrastructure will incur upfront capital expenditure, the long-term savings to both operational costs and the benefit to the planet will prove beneficial.
Although negative political headlines regarding moratoriums and local NIMBYs have dominated over the past year, these ignore the record amount of development continuing in those cities and regions that view the data center industry as a benefit; in fact, entire secondary markets across Western and Northern Europe and Southeast Asia have launched as traditional primary markets have slowed approvals. This will be a continuing opportunity in 2023 and beyond, as those companies that can find the right mix of power availability, supportive planning, and low latency will gain adherents even in currently non-traditional cities. Expect further exceptional growth in cities such as Santiago, Warsaw, Jakarta, and Portland, with many other exciting cities appearing on the data center radar throughout 2023!
