Are emerging Nordic centres Copenhagen, Oslo, Stockholm and Helsinki (COSH) primed to benefit?
Dublin, Frankfurt, London, Amsterdam and Paris used to be so important to the data center market they got their own acronym. But now the DFLAP markets are struggling to offer what hyperscale and enterprise data center customers need. The massive growth in DFLAPs might be over – what happened, and what’s next? Three issues in particular are now limiting the opportunities for data center providers in these markets; access to power; availability and cost of land; and political uncertainties. Are emerging Nordic centers Copenhagen, Oslo, Stockholm and Helsinki (the COSH markets) primed to benefit?
DFLAP Low Power Warning
Data centers are not only power-hungry, but they are very high-density consumers of power. This means that they suck in a significant proportion of the power generation capacity available in a location, consuming far more per square metre of land than anything else. Not only does this strain the distribution grid, but it means power is less available for other industrial, commercial and residential uses. It is estimated that the power generation capacity needed to power Dublin’s data centers will need to double in the next 10 years. The Irish grid company, Eirgrid reported that by 2027, electricity consumed by data centers will have risen to 31 per cent of the total consumption for the whole of Ireland.
There are also implications as cities and countries try to de-carbonise power generation. Forty per cent of Germany’s electricity is still generated by burning coal – but the Federal government has committed to decommission a quarter of the country’s coal-burning plants with a capacity of 12.5 gigawatts by 2022. The impact this will have on the heavy power consumers such as Frankfurt’s data centers is yet to be determined.
Other large metropolitan areas including London and Paris must also balance the needs of increasing populations and commercial activities with the demands of data center operators. It will become increasingly difficult politically to support energy hogs if citizens and other businesses find supply and capacity constrained.
Space to grow
The DFLAP group are all successful cities, growing in terms of population and business activity. This puts huge strain on increasingly limited land. And everyone wants the same pieces of land. Around London, the M25 orbital motorway provides a logistics corridor essential for many businesses. Land nearby and with good access is highly sought after for all types of business, real estate agency Knight Frank predicts that in the next 5 years computing and information services will be just one of four sectors driving demand for 1.5 million sq ft of additional office space in the region. As a result competition for and cost of land in these areas has rocketed, rents for industrial properties rising 20% in some areas, With commercial land selling for up to £5m an acre, London is the most expensive of the DFLAP markets for data center builds, a fact borne out by global professional services company Turner & Townsend’s Data Center build Cost Index (DCCI).
Political winds shifting
Both these factors have political aspects. Local, regional and national governments all want to attract in-bound investment, and for years data center operators have been courted to choose one location over another. However, as availability of power and space decline and as public pressure over sustainability increases, many are having second thoughts. Last Summer Amsterdam declared a moratorium over any further data center deals in the city. Paris was rumoured to be considering similar. Operators are still waiting on the recommendations of Amsterdam’s review, and it is unlikely to be the last. In crowded, maxxed-out cities, the politics of approving new data center builds just got a whole lot harder.
With Extinction Rebellion increasingly scrutinising all industries with high power consumption, data centers will surely soon become one of their targets. My view is that unless there is a significant renewable element to any new data center proposal, at planning and zoning levels, we will see a significant squeeze on the data center market. Hyperscalers have made some big public commitments to be carbon neutral, but with growth moving at break-neck speed, maintaining this at all sites is challenging. The existing DFLAP markets are not blessed with quantities of sustainable energy generation capacity and so have fewer options than emerging challenger markets.
Taking the data processing to the energy source rather than the energy source to the data is increasingly the better option.
COSH it’s the place to be
Is COSH poised to eclipse DFLAP? Maybe not eclipse but is certainly ticks all the boxes. Latency technologies are allowing compute to be further away from the data source, making COSH a competitive option. Sites around Copenhagen, Oslo, Stockholm and Helsinki (COSH) offer compelling alternatives to DFLAP locations. Thanks to the dominance of low-cost hydroelectricity in the region there is an almost unlimited supply of sustainable energy on the doorstep. Plus, the cooler climate reduces overall power-consumption through ‘natural’ cooling using moist, cool air for most of the year. Land is more readily available and cheaper. DigiPlex already owns several plots ready for development so can deliver extremely fast time to market for its customers. Scandinavian populations are digitally savvy, and their governments are committed to building digital societies. The political and business environment is stable and welcoming to data centers. A well-skilled local workforce is also available to build and operate digital infrastructure.
At DigiPlex we are already winning Hyperscale and international business as they see the advantages of a Nordic location, and for us, COSH markets are the next big thing.
Article by VP International Sales – Tim Bawtree
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