Data Center Cooling Market Size, Share & Trends Analysis Report By Component (Solution, Services), By Data Center Type (Large Scale Data Center, Medium Scale Data Center, Small Scale Data Center), By Cooling Technique (Room-based Cooling, Rack-based Cooling, Row-based Cooling), By End User (BFSI, IT and Telecommunication, Manufacturing, Retail, Healthcare, Energy) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Market Overview

The global data center cooling market size was valued at USD 18.2 billion in 2023. It is projected to reach USD 67.5 billion by 2032, growing at a CAGR of 15.7% during the forecast period (2024-2032)

Data centers are strategic building blocks for many organizations, as they provide centralized storage, networking, and backups. Large amounts of data generated are primarily responsible for the escalating need for greater computing capacity in computer networks. This has led to an increase in the energy consumption of data centers. This increase in data center energy consumption has prompted financial and environmental concerns. These considerations necessitate the optimization of data center cooling strategies. Data center cooling refers to the monitoring, measuring, and controlling of data center resources and energy consumption in IT-related equipment such as servers, network switches, and storage, as well as infrastructure components such as computer room air conditioners and power distribution units.

To facilitate the rapid increase in data storage and facilities such as backup data, archiving, managing verification, and authorization, the data centers must utilize their IT hardware infrastructure and services, including servers, power distribution units (PDUs), and other components, appropriately. The efficient operation of a data center is contingent upon optimal planning, predictive analysis, and the regulation of load power, server, and process automation capacities.

Market Dynamics

Global Data Center Cooling Market Drivers

Increasing Demand for Rack Cooling Solutions

The demand for high computing capacity modified the operational standard for data centers. It creates a more complicated environment, making Computer Room Air Conditioning (CRAC) units an insufficient solution on their own. Today, inadequate rack cooling is a prevalent issue in data centers. A recent study found that server racks in eight out of ten facilities are overheated. This issue causes the worst nightmare for data center administrators, which is downtime.

Adopting the rear door heat exchange (RDHX) system can assist data centers in maintaining rack density. A heat exchanger is installed on the server racks' rear doors to absorb heat. It will later be transferred to the matrix or coil of the heat exchanger. It's like solving two issues at once: inefficient cooling and excessive energy consumption. RDHX is applicable for both newly designed and existing data centers. The component is included in the construction of a new rack enclosure. Incorporating it into existing high-density racks can also improve the cooling system. Additionally, it can provide adequate cooling while eliminating the need for complex under-floor air distribution. Densely packed electrical components, such as processors and other components in data centers, generate more heat and have increased exposure to the outside air. This is generating an enormous demand for new cooling techniques and innovations, which is anticipated to boost the market of data center cooling.

Increasing Demand for Storage of Data

There is a remarkable increase in the number of data center deployments as a result of the rising demand for additional storage to store vast amounts of regularly generated data. Increasing data centers contribute to an increase in global energy consumption and excessive heat production. This is anticipated to generate substantial demand for energy-efficient cooling methods in the near future. Due to technological advancements such as Industry 4.0 and IoT, infrastructure spending is undergoing dramatic changes. Thus, utilizing advanced data center cooling services is likely to aid in optimizing power consumption, thereby making the operation of data centers more energy-efficient and reducing their operational costs.

Global Data Center Cooling Market Restraint

High Energy Consumption

A typical data center contains numerous types of equipment, nearly all of which require electricity. The energy consumption of older servers and network communications equipment is greater than that of newer, more energy-efficient systems. In the coming years, data center power consumption will continue to rise. This trend is in part fueled by the continued popularity of cloud data centers, which are currently among the largest energy consumers. Data centers utilizing energy-efficient HVAC systems, equipment racks with cooling systems, and energy-efficient doors and windows will engage in a significant amount of ongoing energy consumption management. In developing nations, high energy consumption can impede market growth.

Global Data Center Cooling Market Opportunities

Innovations in Data Center Cooling Technology

Standard data center temperatures range from 20 to 22 degrees Celsius to optimize performance. When operating a data center in a hot climate, up to 33 percent of the energy consumed is used to operate the cooling systems and infrastructure, and electricity costs can account for more than 50 percent of operating expenses. High-temperature data centers, Specially designed for hot conditions, can reduce capital expenditures because chillers and other cooling equipment are no longer required to cool the data centers and IT equipment below ambient temperatures. With the proper equipment, operating expenses can also anticipate a 45% decrease in overall electrical costs and a spectacular 96% decrease in cooling costs.

Regional Analysis

North America Dominates the Global Market

North America is the most significant shareholder in the global data center cooling market and is expected to grow at a CAGR of 10.94% during the forecast period. The significant presence of colocation service providers such as Equinix, AT&T, and others in countries such as the United States and Canada is primarily responsible for the region's growth. In addition, increasing data center leasing activities in Northern Virginia and rising demand from a substantial number of cloud users are anticipated to drive market expansion. In addition, the gradual shift in workload toward hosting companies that offer colocation, cloud, and other services is anticipated to influence the data center cooling market in Canada. The United States has the most data center facilities in North America, making it a significant user of data systems. Companies in the United States devote significant resources and capital to data centers. These factors are anticipated to drive the North American market. In April 2022, Google announced its new USD 750 million data center in Nebraska to bring more opportunities for the local communities and grow their businesses by using digital services.

Asia Pacific is expected to grow significantly, with the highest CAGR during the forecast period 2023-2031, owing to increasing demand for data centers from South East Asian countries such as Singapore, Vietnam, and others. Various expansion strategies adopted by major IT players have also formulated the growth of data centers in this region, owing to the presence of stable infrastructure and a significant leadership position in cloud computing technology. In August 2018, Google announced its third data center in Singapore with an investment of USD 500 million. In March 2022, the Telangana government and Microsoft announced the upcoming data center establishment in Hyderabad, which is going to be the largest data center of Microsoft in India.

Europe is expected to account for a significant share of the global market. One of the major challenges in the expansion of data centers is keeping up with network infrastructure and other related services. In addition, European data center service providers are actively pursuing the reusability of heat generated by organic waste. It will be possible to accomplish CO2 reductions by reusing the heat produced by data centers.

The LAMEA is expected to grow swiftly owing to the increasing adoption of cloud technology in the Middle East, South America, and Africa. According to Cisco's Cloud Index, by 2019, MEA cloud traffic is expected to witness the highest growth rate of 41%. Expansion strategies such as IT/Telco partnerships are also expected to play a significant role in driving market growth. Equinix has partnered with Emirates Integrated Telecommunication, which includes a data center in the UAE Emirate of Dubai. This data center is utilized to run as a colocation site for carriers, content providers, financial enterprises, and others. Khazna Data Centers will construct a new data center in Sharjah, United Arab Emirates, in September 2022. (UAE). The wholesale data center company announced the formation of a joint venture with BEEAH Digital, the digital transformation and future technology division of BEEAH Group, to construct a data center in Sharjah.

Segmental Analysis

Based on components, the global data center cooling market is segmented into solutions (Air Conditioning, Chilling Units, Cooling Towers, Economizer Systems, Liquid Cooling Systems, Computer Room Air Conditioning (CRAC), Computer Room Air Handler (CRAH) Control Units, Others) and services (Consulting and Training, Installation and Deployment, Maintenance and Support)

In the global data center cooling market, the solutions segment is currently dominating over services. This segment includes a variety of cooling technologies such as air conditioning, chilling units, cooling towers, economizer systems, liquid cooling systems, Computer Room Air Conditioning (CRAC) units, Computer Room Air Handler (CRAH) units, control units, and other specialized cooling solutions. The dominance of solutions is driven by the critical need for efficient and reliable cooling technologies to manage the substantial heat generated by densely packed data centers. With the exponential growth of data traffic, cloud computing, and big data analytics, there is an increased demand for robust cooling systems to ensure the optimal performance and longevity of data center hardware.
 
The solutions segment is established in the market through continuous innovation and the integration of advanced technologies that improve energy efficiency, reduce operational costs, and enhance the overall reliability of data centers. Companies in this segment invest heavily in research and development to create cutting-edge cooling solutions that cater to the specific needs of modern data centers. The adoption of green technologies and sustainable practices, such as economizer systems and liquid cooling, further strengthens the market position of the solutions segment by addressing the environmental concerns associated with high energy consumption.

Moreover, the solutions segment benefits from the large-scale infrastructure investments by data center operators who prioritize state-of-the-art cooling systems to meet regulatory requirements and achieve competitive advantage. The widespread availability of various cooling technologies across global markets, supported by robust distribution networks and strategic partnerships, also contributes to the segment's dominance. While services like consulting, installation, deployment, maintenance, and support are essential for the effective implementation and operation of cooling solutions, they typically complement the primary demand for hardware and systems. Consequently, the solutions segment remains at the forefront of the global data center cooling market, driven by ongoing technological advancements and the critical need for efficient thermal management in data centers.

Based on data center type, the global market is bifurcated into large-scale DC, medium-scale DC, and small-scale DC. The large-scale data center segment is the highest contributor to the market during the forecast period. The bigger share is linked to the large amount of data generated due to the expanding use of cloud-based services. There is a growing demand for much more servers and storage capacity to accommodate this data. These variables are likely to increase demand for large-scale data centers.

The medium-size data center segment is anticipated to grow at a significant CAGR, owing to the increasing demand for storing consumer data by medium-sized organizations and startup companies in developing countries.

Based on the cooling technique, the global market is bifurcated into room-based cooling, rack-based cooling, and row-based cooling. The rack-based cooling segment is the highest contributor to the market and is expected to grow at a CAGR of xx% during the forecast period. The airflow paths within a rack are precisely defined. Rack-based cooling is simple to implement, increases extreme density, and incurs additional costs. Due to the additional benefits of rack-based cooling techniques, businesses are likely to make long-term investments in these methods.

The row-based cooling segment is expected to grow at a higher CAGR, owing to its cost-effective flexibility, speed, and a number of the density benefits of the rack-based approach. In contrast to room-based cooling, airflow paths are shorter and more precisely defined. This decreases the fan power required by the CRAC, increasing its efficiency. Additionally, a row-oriented design enables cooling capacity and redundancy to be tailored to the actual requirements of particular rows.

Based on end users, the global market is bifurcated into BFSI, IT and telecommunication, manufacturing, retail, healthcare, and others. The IT and telecommunication segment is the highest contributor to the market, and it is expected to grow at a CAGR of xx% during the forecast period. There is a variety of hosting services, including cloud services and web hosting companies. Web 2.0 consists of Twitter, Google, Facebook, and others. High demand for data center service and cooling exists among these businesses. Furthermore, energy consumption contributes to the initial operating costs of the telecom industry. Maximum energy is used to power and cool the supporting infrastructure for electronic equipment. For instance, mobile switching centers (MSC) are outfitted with an abundance of heavy electronic equipment, such as servers, cables, and batteries. Therefore, service providers must maintain the specified cooling temperature to ensure the proper operation of the equipment.

The healthcare segment is expected to grow at a higher CAGR, owing to the rise in the maintenance of healthcare records in a digitized mode through an electronic healthcare record system. The digitalization of the healthcare sector will increase the need for servers to store data and eventually contribute to the growth of the market.

Impact of covid-19

The pandemic had caused a lockdown in almost all the countries across the world backed up by strict government regulations such as social distancing and quarantine. A severe effect of the lockdown was observed on the economy of various countries which further canceled certain construction projects temporarily or permanently.

Further, immediate long-term effects were seen in the supply chain and the deployment of smart solutions required in the smart buildings. However, the ease offered and the multiple benefits of the smart building solutions are anticipated to increase the deployments during the time.

Recent Developments

• In September 2022, Schneider Electric launched its new service EcoStruxure service plans in India to provide enhanced packages combined with digital services to address consumer needs.
• In July 2022, Airedale International started the full-scale manufacturing of chillers at the US Chiller plant in Rockbridge, Virginia, and confirmed a deal with Corscale for further business plans.