Data Center UPS Market

Market Overview

The global data center UPS market size was valued at USD 5.25 billion in 2022. It is estimated to reach an expected value of USD 7.82 billion by 2031, growing at a CAGR of 4.61% over the forecast period (2023–2031). The majority of market players provide lithium-ion-based UPS systems for data centers, which will contribute to the data center UPS market's expansion throughout the projected period.

Data centers are created and developed as mission-critical infrastructures to process the data consumers and corporate end-users generate. Fiber optic lines connected to satellites or telecom broadband connect data centers to customers and companies. They comprise IT infrastructures connected to processing and storing user data, including servers, storage, and network equipment.

Data centers also include power and cooling infrastructure to provide end customers with highly available, extremely dependable, and scalable services. Depending on their location, size, and capacity, data centers can cost thousands to billions of dollars to build. Regarding power infrastructure, data centers are equipped with UPS systems, PDUs, generators, transfer switches, switchgear, and other infrastructure.

Market Dynamics

Global Data Center UPS Market Drivers

Innovative UPS Battery Technology

The ineffective operations of VRLA-based UPS systems have brought forth multiple innovations in the market. In the past three years, prominent vendors operating in the data center UPS market have started providing lithium-ion UPS systems, which are an effective alternative to VRLA battery systems. At this stage, the market is witnessing higher procurement of lithium-ion-based UPS systems by leading data center operators. Data center operators, especially those that suffered a loss of service due to VRLA battery failure in their facilities, are also increasingly adopting lithium-ion batteries in their data centers.

Furthermore, market players such as Vertiv Group, ABB, Schneider Electric, and Eaton are seeing a huge demand for lithium-ion UPS systems from data center operators. For instance, multiple data centers of Digital Realty in Sydney are equipped with lithium-ion batteries for enhanced performance. Edge data centers also adopt lithium-ion batteries; for instance, GPX Global Systems' (Equinix) Mumbai data center has adopted Eaton UPS systems with lithium-ion batteries to power the facility. Hence, almost all vendors offer lithium-ion-based UPS systems for data centers, which will aid the market's growth throughout the forecast period.

Rising Data Center Investment

In 2020, over 400 data center projects were developed and under construction across the globe. The data center market received an overall investment of over USD 40 billion, with colocation providers leading market investments, investing in over 345 data centers. The major colocation service providers investing in data center facilities across the world are Equinix, Digital Realty, CyrusOne, GDS Services, Shanghai AtHub, AirTrunk, NEXTDC, QTS Realty Trust, Vantage Data Centers, Switch, ST Telemedia Global Data Centers, NTT Global Data Centers, Colt DCS, CoreSite Realty, and Iron Mountain.

Many new investors such as T-Rex (USA), Archer Data Center (USA), AQ Compute (Europe), Scala Data Centers (Latin America), Echelon Data Centres (Europe), PointOne (USA & Canada), and Cirrus Data Services (USA), Global Technical Realty (Europe), Stratus DC Management (Worldwide), Mantra Data Centers (India), Digital Edge DC (APAC), Africa (Kenya), and PAIX Data Centers (Ghana & Kenya) are building hyperscale data center campuses to attract cloud service providers. Likewise, the US market grew by adding around 130 data center facilities and expansion projects in 2020. In the US, several data center service providers are investing over USD 200 million individually in new construction and expansions in the data center market. Hence, rising data center investment leads to data center UPS market growth.

Global Data Center UPS Market Restraint

Lack of Skilled Workforce in Data Center Engineering

One of the biggest issues in the industry is the shortage of qualified workers, which discourages investment in certain parts of the world. Data center professionals are in low supply in many nations, which affects data center design, building, installation, commissioning, and maintenance. Many educational institutions have developed courses to educate students on data center technologies. Moreover, the core skills required to build data centers, including design and engineering, are scarce across multiple countries.

The slowdown in construction and engineering is also pushing data center operators to opt for prefabricated modular data center (plug-and-play) solutions from infrastructure vendors such as Rittal, Schneider Electric, and Vertiv Group. In the Middle East, organizations do not offer advanced training for IT staff, and the gender disparity in the workforce, especially in the IT sector, is quite high. In Central and East Europe, migration and low fertility rates will shrink the working-age population by about 30% by 2050. Russia will witness a nearly 3 million skilled staff shortage by 2030, resulting in considerable business losses for the country. Hence, the instances mentioned above impede market growth.

Global Data Center UPS Market Opportunities

Growing Rack Power Density

Growing rack power density has led to creative and adaptable facility designs that include a variety of electrical inputs for racks as well as rack-level UPS solutions. The power infrastructure of many big and mega data centers can support up to 50 kW of rack density. Throughout the projection period, there will be a rise in the number of new data center projects with this installation, raising the need for power infrastructure solutions. Likewise, rack-level UPS units for Amazon Web Services' data centers are designed specifically for high-density racks, and they will supply power only to designated racks. This will ensure that a failure in one UPS system will only affect that particular rack and not the rest of the data hall.

Moreover, the need for power infrastructure with a high density will increase as the density of racks increases. Most of the data centers will be involved in procuring over 10 kW rack PDU solutions, along with 10−20 kVA rack-level UPS systems. The market will witness an increase in innovations in the power architecture of data centers as the number of HPC data centers rises.

Regional Analysis

Region-wise, the global data center UPS market share is segmented into North America, Western Europe, Central and Eastern Europe, Nordics, Asia-Pacific, Latin America, and the Middle East and Africa. 

North America Dominates the Global Market

North America is the most significant global data center UPS market shareholder and is estimated to exhibit a CAGR of 3.45% during the forecast period. With the early availability and adoption of cutting-edge technology and investments from colocation service providers, hyperscale data center operators, businesses, and governmental organizations, the North American data center market is driving growth in the entire data center industry. The region is a key driver and acts as an incumbent for any new technological innovation in the data center space. The US accounts for around 45% of the overall data center investments globally and is also one of the largest contributors to the global data center power market.

Moreover, Virginia, Texas, and California are the major markets for data center operations, followed by Illinois, Georgia, Nevada, and Oregon. Canada's cheap power costs of approximately USD 0.05 per kWh and easy access to renewable energy sources make it an emerging industry. In Canada, Ontario is the hub for data centers, with a large supply of renewable energy, followed by Montreal.

Asia-Pacific is expected to grow at a CAGR of 5.38% during the forecast period. The regional data center market is primarily driven by rising internet users, rising social media usage, rising smartphone penetration, adoption of public cloud and hybrid cloud services, and the requirement for businesses to move from server room environments to data centers. In a few countries in the Asia-Pacific region, namely Singapore, Indonesia, and Australia, the procurement of DRUPS systems that combine flywheel UPS and diesel generators is higher than that of stand-alone UPS systems and generators. In addition, the awareness of lithium-ion UPS systems has grown significantly in the region, especially in a few countries like India and Australia. In India, 7 out of 10 data center operators are considering the potential benefits of deploying lithium-ion UPS solutions.

Furthermore, some countries within Asia-Pacific, like India and Indonesia, have high population growth and a high demand for data storage; however, there are not enough data centers. These countries will see significant growth in data center investments during the forecast period to cater to the rising demand. The upcoming 5G technology installations in various countries will also lead to higher demand for edge data centers in technology-driven countries in the region.

Western Europe is deemed an established market for data centers. The GDPR (Global Data Protection Regulation) coming into effect in 2018 affected the data center market in Western Europe, causing customers to shift their data to cloud-based services for data localization, resulting in more data center projects. After COVID-19, remote working increased the demand for cloud-based services and remote access and monitoring of data due to skyrocketing data generation. The advancement of 5G is increasing the demand for edge data centers and IT infrastructure development.

Moreover, significant growth in data center demand has been noted in secondary markets such as Ireland, Spain, Italy, Portugal, Belgium, and Switzerland. Multiple projects in these regions are being carried out by colocation, cloud, telecommunication, and internet service providers. These technological advancements and increased investments translate to higher power needs, redundancy requirements, high-density rack demand, and efficient supporting power infrastructure. The burgeoning data center power needs also raise the demand for renewable energy.

Segmental Analysis

Segmental Analysis of the Global Data Center UPS Market:

The global data center UPS market has been segmented based on UPS battery technology, system, and tier standards. 

Based on the UPS battery technology, the global data center UPS market is classified into lithium-ion, flywheel, and VRLA. 

The VRLA segment dominates the global market and is estimated to expand substantially during the forecast period. VRLA batteries are classified as Gel Cell and Absorbed Glass Mat (AGM) based on the type of electrolyte used. These batteries are also sub-classified based on plate and container types. Data center operators widely use VRLA battery-powered UPS systems as these batteries are cost-effective solutions in data centers with an average life cycle of five years from installation.

Based on the UPS system, the global market is 500-1,000 kVA, >1,000 kVA, and <=500 kVA.

The <=500 kVA segment owns the highest data center UPS market share and is anticipated to exhibit a CAGR of 5.85% during the forecast period. Regarding capacity, vendors offer multiple UPS systems with a power capacity of <=500 kVA. Several products are offered at 1─50 kVA, and these systems are mostly adopted at the rack level. These systems have a larger market in small- and medium-sized data centers. Some data centers use multiple 2U UPS systems within a single rack to support multiple rows of IT gear at the row level.

Furthermore, the full containment of 20 racks or more of (hot/cold) IT systems can be supported by 500 kVA UPS systems commonly used in data centers. Prefabricated data center operators will experience faster growth for =500 kVA UPS systems than traditional brick-and-mortar facilities. UPS systems with a capacity of under 500 kVA are being used by numerous small- and medium-sized data centers with a power density of less than 1 MW.

Based on tier standards, the global data center UPS market is categorized into Tier I & II, Tier IV, and Tier III. 

The Tier III segment dominates the global market and is expected to exhibit a CAGR of 6.80% during the forecast period. A majority of under-developed projects across the globe fall under the Tier III category. Tier III facilities with at least N+1 redundancy are the norm for newly constructed data centers. They incorporate adaptable data center designs and can be adjusted with redundancy levels up to 2N+1. Data centers such as EdgeCore's Ashburn, which is of Tier III standard, have adopted UPS systems with N, N+1, and 2N redundancy.

Recent Developments

• July 2023 - Schneider ElectricTM started offering Easy UPS 3-Phase Modular. This reliable uninterruptible power supply (UPS) offers third-party validated Live Swap capabilities while being built to safeguard essential loads. Easy UPS 3-Phase Modular supports the EcoStruxureTM architecture and comes in capacities ranging from 50 to 250 kW with an N+1 expandable design.
• June 2023 - Delta unveiled the "Intelligent Sustainable Connecting Hub" at COMPUTEX 2023 to Echo Our New Brand Value Proposition of "Realizing an Intelligent, Sustainable, and Connecting World."