Data Center Precision Air Conditioning Market

Market Overview

The global data center precision air conditioning market size was valued at USD 2,310 million in 2022. It is estimated to reach USD 3,649 million by 2031, growing at a CAGR of 5.21% during the forecast period (2023–2031).

Data centers are designed and developed as mission-critical facilities to process data generated by consumers and business end-users. Consumers and businesses can connect to data centers through fiber optic cables or a satellite. Data centers comprise IT infrastructures such as servers, storage devices, and network infrastructure. They also consist of cooling infrastructure to offer highly reliable and scalable services to end-users. For IT equipment in locations like data centers and computer rooms, precision cooling is air conditioning that is specifically intended for them. These cooling equipments are specifically designed to control temperature and humidity in data centers and server rooms. 

Market Dynamics

Global Data Center Precision Air Conditioning Market Drivers

Rising Deployment of Modular Data Centers 

In recent years, modular data center construction has been a significant market trend. It is a driving factor in meeting the growing demand for additional data centers in the future years. To reduce network latency, many telecommunication providers are deploying modular data centers. They are usually deployed in remote locations to balance the demand for low latency with investment and power usage. In many cases, they can also be used to meet the demand for high power density. In addition, the cost of operating a modular data center is around 30% lesser than that of a traditional data center facility.

Modular data centers include power and cooling systems, cabinets, and racks. They are primarily plug-and-plug and less expensive to build because they are made of standardized components. In addition, modular data centers cater to significant challenges such as a high PUE, high operational costs of traditional data centers, and the need for a skilled workforce to handle data center operations. Modular data centers can be used in cases where rapid deployment needs to take place.

Increase in Rack Power Density

The rack power density is one of the critical factors in data center design, capacity planning, cooling, and power provisioning. There has been a rise in the rack power density in IT equipment over the past few years. The adoption of compute-intensive workloads such as AI, IoT, Augmented and Virtual Reality, and the increasing trend of cryptocurrency mining have increased data storage and processing requirements, which has led to the adoption of high-density racks.
The average rack power density has increased over the last few years for data centers offering colocation and cloud-based services. The data center market witnessed a higher adoption of converged and hyper-converged infrastructure from cloud and enterprise data center operators. The increasing popularity of cryptocurrency globally has increased the rack power density. The growing rack power density increases the need for efficient cooling systems. These servers consume more power due to the sheer load of data traffic, so the heat generated from the servers will go up, too, thus raising the need for cooling.

Global Data Center Precision Air Conditioning Market Restraint:

Increasing Carbon Emissions and Power Outages 

In recent years, data centers across the globe have increased the demand for electricity due to the construction of extensive hyper-scale data center facilities. Data centers contribute over 1% of greenhouse gas emissions and consume around 3% of power worldwide. Most data centers are also looking to reduce carbon emissions and power wastage by using energy-efficient cooling infrastructure, moving toward free-cooling technology, improving server utilization through virtualization, and removing comatose servers. 

Furthermore, data center operators are equipping racks with up to 40 kW of power density, increasing power consumption and heat in smaller spaces. Higher power consumption among data centers also leads to more carbon-dioxide emissions, hampering market growth.

Global Data Center Precision Air Conditioning Market Opportunities

Implementation of Monitoring and Automation Solutions 

Modern data centers are increasingly designed with end-to-end monitoring and facility automation, reducing power usage and waste. The traditional capacity planning in most data centers failed due to a workforce crunch. In most cases, the data center operators and the IT management needed to prepare to support mass remote access to the technologies and tools. In addition, traditional capacity planning is CAPEX-heavy for data center operators and needs to be more accurate. Moreover, as data stored in hyperscale facilities is in exabytes, the power outage cost can be high compared to small facilities. Such factors have contributed to tremendous growth in data center infrastructure management (DCIM) technologies. 

Modern data centers are increasingly being designed with end-to-end monitoring and facility automation, reducing power usage and wastage and decelerating power consumption over the last three years compared to a decade ago. Data center operators are also adopting intelligent monitoring using technologies such as Artificial Intelligence (AI) to minimize errors associated with manual interventions. Various hyperscale data center operators such as Digital Realty, Google, Facebook, Equinix, and Microsoft are investing in software-defined power infrastructure to minimize data center downtime.

Regional Analysis

By region, the global data center precision air conditioning market is divided into North America, Western Europe, Central and Eastern Europe, Asia-Pacific, Nordics, Southeast Asia, Latin America, and the Middle East and Africa.

North America Dominates the Global Market

North America is the most significant shareholder in the global data center precision air conditioning market and is anticipated to grow at a CAGR of 3.48% during the forecast period. The market in North America is growing due to the rapid growth of data centers. The North American data center market is the fastest-growing industry because colocation service providers, hyperscale data center operators, businesses, and government agencies were among the first to offer and use new technology. In addition, the region is a crucial driver and incumbent for any new technological innovation in the data center arena. The major contributors to market growth in North America are Facebook, Google, Equinix, Digital Realty, Compass Datacenters, Cologix, Vantage Data Centers, NTT Global Data Centers, QTS Realty Trust, CoreSite Realty, CyrusOne, and Switch. 

Asia-Pacific is estimated to grow at a CAGR of 6.03% over the forecast period. The main factors driving the Asia-Pacific data center market are businesses need to move from server room environments to data centers and the rise in social media usage, public cloud, hybrid cloud adoption, and internet user growth. The data center industry in Asia-Pacific is gradually growing thanks to ongoing investments from hyperscale and cloud service providers like AWS, Microsoft, Google, and Alibaba. Local colocation providers are also increasing their footprint in each nation and building more data centers, boosting the market.

In the past few years, countries like Brazil, Chile, Colombia, Mexico, Bolivia, and Argentina have brought a lot of money into the Latin American data center market. More submarine network connections will be built in Latin American countries, leading to more data centers, thanks to the work of government agencies, telecommunication service providers, and utility providers. The significant factors that drive service providers to develop data centers in the region are solid fiber connectivity growth, power supply reliability, and high demand for data center services from industries such as BFSI, IT, and healthcare.

The data center market in Western Europe makes up a sizable portion of Europe. There are many global and local data center operators in this market. The Global Data Protection Regulation (GDPR), which took effect in May 2018, benefited the Western European data center business by encouraging users to localize their data using cloud-based services. As a result, there were more data center projects. The number of investments witnessed for data center constructions across Frankfurt, London, Amsterdam, Paris (FLAP), and Ireland data center markets in Western Europe has been growing significantly. 

Nordics is a favorable location for data center investments by hyperscale, colocation providers, and cryptocurrency data center operators. Hyperscale data center operators open cloud regions in the Nordics to support local and regional customers. The adoption of cloud-based services, big data analytics, and IoT services has grown significantly by local enterprises across countries in the Nordics, boosting local colocation demand in the market. In cloud adoption, public cloud environments and hybrid infrastructure services have witnessed strong growth in recent years. 

Segmental Analysis

The global data center precision air conditioning market is segmented by product, deployment, and tier standard.

By product, the global data center precision air conditioning market is divided into CRAC units and CRAH units. 

The CRAH unit segment is the highest contributor to the market and is anticipated to grow significantly over the forecast period. CRAH (computer room air handler) units are floor or roof-mounted precision air conditioners that supply cold air inside the data hall. These are similar to CRAC units with a significant difference; the air is blown over a cooling coil filled with water instead of refrigerant. CRAH units have higher heat removal capacity than CRAC units. Modern CRAH systems used in data centers are precision air-conditioners. In addition, CRAH units work with other cooling units, such as chillers, cooling towers, dry coolers, and condensers. CRAH units facilitate chilled-water cooling, making them suitable for medium to extensive data center facilities that use water for cooling purposes. 

CRAC (computer room air conditioner) units are floor or roof-mounted precision air conditioners that supply cold air inside the data hall. A CRAC unit comprises an inbuilt direct expansion (DX) refrigeration cycle. These units also include compressors for the refrigeration cycle. In CRAC units, the air is blown over the cooling coil filled with refrigerant, glycol, or condensed water. There are also CRAC units being offered in the market with multi-stage compressors. CRAC units work with other cooling units, such as chillers, cooling towers, dry coolers, and condensers. In addition, modern CRAC systems used in data centers are precision air conditioners. DX-based CRAC units are suitable for smaller data centers with low rack power density. Several data centers are built to operate at a rack power density of 5 kW or less and are meant to be modular. Also, several data centers use CRAC units to supply cold and hot exhaust air from the data hall.

By deployment, the global data center precision air conditioning market is segmented into in-row cooling, in-rack cooling, and centralized cooling. 

The in-row cooling segment owns the highest market and is expected to grow at a CAGR of 5.51% over the forecast period. In-row cooling technology is a precision air conditioning system used in data centers. It is the most efficient cooling technology, wherein CRAH units are placed between the IT racks or mounted overhead. This cooling system is used in data centers with a rack power density of more than 5 kW per rack and features a more significant number of rack cabinets. This cooling system pulls warm exhaust air directly from the hot aisle, distributes it to the cold after cooling, and ensures that inlet temperatures are steady for precise operation. In-row cooling also avoids mixing hot and cold air, thus increasing efficiency.

In-rack cooling systems are used in high-density areas inside mega data center facilities. This cooling system cools down the servers placed inside the closed rack cabinets. It has been developed specifically to prevent warm and cold air from merging. In-rack cooling systems are meant for higher temperatures than other cooling systems. This efficient cooling system uses refrigerant or chilled water as a cooling medium for the server racks. After implementing 5G across countries after 2021, installing edge computing facilities comprising fewer than ten racks will fuel the market for in-rack cooling systems. Developed countries and hyperscale operators will enable the adoption of modular in-rack cooling solutions during the forecast period.

By tier standard, the global data center precision air conditioning market is segmented into tier I and II, tier III, and tier IV. 

The Tier III segment is the highest contributor to the market and is anticipated to grow at a CAGR of 6.24% over the forecast period. A Tier III data center has minimum N+1 redundancy in power and cooling infrastructure with around 1.60 hours of annual downtime and an availability of 99.982%. Several data centers built in recent times are of Tier III standards due to an increased need for redundant components to at least support critical applications in data centers. The infrastructure components in Tier III facilities are concurrently maintainable, where redundancy adopted is a minimum N+1. Most under-developed projects across the globe fall under the Tier III category. In addition, more than 350 data center projects that are open and under construction fall into the Tier III category. 

Tier IV data centers are equipped with at least 2N+1 redundancy in all their infrastructural components, which makes the facility fault-tolerant, with a few having 2N+2 redundancy in some cooling systems. Self-built data centers by hyperscale developers such as Facebook, Apple, Microsoft, and Google are considered Tier IV facilities. These hyperscale operators invest billions of dollars to grow the market for Tier IV data centers.

Recent Developments

• November 2022- Brazilian firm Zeittec is set to build a new data center for the Federal University of Espírito Santo (UFES) in the city of Vitória in Espírito Santo state.
• October 2022- Modine Manufacturing Company, a diversified global leader in thermal management technology and solutions, announced that it had shipped its first chillers for the data center market from their newly repurposed production facility in Rockbridge, Virginia, as part of a previously announced order with data center giant, Corscale.