Green Data Center Market

Market Overview

The global green data center market size was valued at USD 51.23 billion in 2023. It is estimated to reach USD 238.53 billion by 2032, growing at a CAGR of 21.2% during the forecast period (2024–2032). The market expansion is expected to be enhanced by renewable energy efforts implemented by colocation and enterprise operators. A green data center, also known as a sustainable data center, is a facility that employs energy-saving technologies. They lack obsolete systems (such as inactive or underutilized servers) and use newer, more effective technologies. It operates predominantly on solar, wind, or hydropower, and its components are designed to maximize energy efficiency and minimize carbon footprint. Data centers use much more energy due to the Internet's exponential growth and use. Due to the resultant environmental impact, increased public awareness, higher energy costs, and legislative action, companies are under greater pressure to adopt a green policy.

Typical components include energy-efficient power supplies, centralized humidification, routers, efficient servers, heating, ventilation, and air conditioning (HVAC), and light-emitting diode (LED) systems. Compared to conventional data centers, these systems aid in burden separation, offer centralized control and simplified data migration, are more resilient, and provide the user with a next-generation storage experience.

Market Dynamics

Global Green Data Center Market Drivers

Renewable Energy Initiatives by Hyperscale and Cloud Operators

Sustainability targets are set by some of the major hyperscale operators deploying data centers worldwide, which is expected to boost market growth. For instance, Google signed a contract with AES in May 2021 to acquire 500 MW of renewable energy to decarbonize its operations. In its Northern Virginia data centers, AES's renewable energy initiative will combine wind, solar, hydro, and battery storage sources. Similarly, in July 2021, Amazon Web Services signed a power purchase agreement with TotalEnergies, wherein the company will supply 474 MW of renewable energy to AWS.

Furthermore, in December 2021, Microsoft signed a power purchase agreement with the NTR energy firm. The energy company will supply 86 MW of wind energy from the Norra Vedbo wind project, which is expected to be online by Q4 2022. Likewise, in October 2021, Facebook (Meta) signed a 160 MW power purchase agreement (PPA) with D. E. Shaw Renewable Investments (DESRI) to power its data centers in Virginia with renewable energy.

Renewable Energy Initiatives by Colocation and Enterprise Operators

Colocation operators deploying mega-scale facilities are setting sustainability targets worldwide. For instance, in April 2021, Vantage Data Centers announced the opening of the first phase of its VA12 data center campus, which will have solar and wind energy sources on site. Similarly, in February 2021, Digital Realty announced its plans to expand its Santa Clara, California, data center campus. The company claims to build the facility using sustainable materials, including recycled concrete and steel.

On-premise data centers often use traditional and inefficient technology, leading to higher GHG emissions. In recent years, enterprise operators have also started to adopt efficient and sustainable infrastructure, especially for larger installations. For instance, in March 2021, Visa, the payment firm, signed an energy agreement with MP2 Energy to power its Virginia data center with 100% renewable energy from solar for five years. Therefore, renewable energy initiatives by colocation and enterprise operators are estimated to boost market expansion.

Global Green Data Center Market Restraints

Lack of Skilled Data Center Professionals

The lack of a skilled workforce is a major hurdle in the market, as this limits investments by organizations in specific locations, such as the Middle East and Africa. It limits data center construction, development, design, and operations. Many regions also face a shortage of skilled employees in constructing and designing data centers.

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 regions. According to the Uptime Institute, 50% of IT managers and data center operators have difficulty finding a skilled workforce for data center operations. Thus, skilled data center professionals shortage is expected to restrict market growth.

Global Green Data Center Market Opportunities

Government Push for Green Data Center Development

Governments worldwide have launched several initiatives to curb emissions and power consumption by data centers. For instance, in June 2021, the Government of Canada initiated an investment plan totaling USD 960 million. The government intends to allocate funds towards enhancing grid infrastructure and implementing intelligent renewable energy initiatives to reduce carbon emissions.

Similarly, according to the State Ministry for Chemical and Fertilizers, New Renewable Energy, by 2030, India has set a target of producing 450 MW of renewable energy. Four solar power plants will be set up in Karnataka, with a combined power capacity of around 1,200 MW. The government and operators' increased interest in curbing power consumption and carbon emissions will propel the growth of adopting renewable energy sources to power data centers in new locations. The trend is expected to create opportunities for green data center market growth during the forecast period.

Regional Analysis

North America Dominates the Global Market

Based on region, the global green data center market is bifurcated into North America, Western Europe, Nordics, Central and Eastern Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

North America is the most significant global green data center market shareholder and is estimated to exhibit a CAGR of 4.58% during the forecast period. The North American market has witnessed new developments and expansion of around 124 data center facilities in 2021, of which over 113 are in the US, with the remaining projects located in Canada. This includes facilities that became operational in 2021 and those expected to be operational by June 2022. However, the demand for cost-effective and efficient power solutions has increased, with more facilities being developed as green data centers. Several innovations that aim to enhance the facility's operational efficiency, minimize power consumption, and decrease carbon emissions have been witnessed in the market.

Furthermore, multiple hyperscale facilities are being powered by renewable energy sources to overcome issues with power consumption and carbon emissions. The higher procurement of AI-based infrastructure solutions is growing the rack power density in many data centers to over 20 kW, leading to increased demand for advanced cooling techniques such as liquid immersion and direct-to-chip cooling. Incorporating custom-designed solutions, such as OCP-based infrastructure, will continue to grow among hyperscale facilities in this region. All these factors contribute to market growth.

Western Europe is estimated to exhibit a CAGR of 7.83% over the forecast period. Western Europe is considered to be an established market for data centers. The Global Data Protection Regulation (GDPR), which became active 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. Western Europe is also one of the leaders in deploying green data centers, especially in countries such as Germany, the Netherlands, France, Ireland, and Switzerland. Most of these countries have free cooling options, higher investment in e-waste management, and the adoption of advanced power and cooling technologies such as liquid cooling, fuel cells, and lithium-ion batteries. There is also a significant push from various governments to develop data centers as green data centers.

The Nordics is a favorable investment area for hyperscale, colocation, and cryptocurrency data centers. The increasing investments by hyperscale operators, bigger facilities by colocation operators, ample availability of free cooling, adoption of advanced technology such as lithium-ion UPS systems fuel cells, and adoption of liquid immersion and direct-to-chip cooling will drive the green data center market in the Nordics in the coming years.

Asia-Pacific is one of the world's most dynamic data center markets, with colocation providers and hyperscale companies increasing their investments. Asia-Pacific's data center market is primarily driven by the increasing number of internet users, increased use of social media, increased smartphone penetration, surged adoption of cloud services, and the requirement for enterprises to shift from server room environments to data centers. In addition, colocation providers dominate the Asia-Pacific data center market, followed by internet and cloud service providers. Many cloud-based service providers depend on the construction of facilities by colocation providers to collocate space wholesale.

In Latin America, telecommunication service providers and regional and global colocation operators have invested in data centers. In addition, cloud service providers like Google, Amazon Web Services, Microsoft, Oracle, IBM, and Tencent Cloud invested in the Latin American market. Major cloud service providers are expanding in the region during the forecast period. In 2021, Brazil was the major contributor, with around 10 data center investments, followed by Mexico, Bolivia, Chile, and Colombia. Similarly, in 2021, Ascenty, Equinix, Scala Data Centers, ODATA, and HostDime were some of the major data center service providers involved in developing data center facilities that were open and under construction from 2021 to June 2022. With the entry of bigger data center players such as Digital Realty, Scala Data Centers, and ODATA, renewable energy adoption and energy efficiency in the region are expected to increase significantly over the next few years.

Segmental Analysis

The global green data center market is segmented by Components, Data Center Size, and End-User.

Based on Components, the global market is bifurcated into Solutions, Services.

Cooling solutions are a vital component within the green data center market, ensuring optimal temperature control for equipment, enhancing energy efficiency, and reducing environmental impact. These solutions incorporate advanced technologies like liquid cooling systems, air containment strategies, and heat recycling mechanisms. By managing the heat generated by servers and hardware, cooling solutions play a crucial role in maintaining the overall sustainability of data centers. As the demand for high-performance computing grows, the need for innovative, energy-efficient cooling systems becomes increasingly significant, contributing significantly to the broader goal of creating eco-friendly data centers.

Maintenance and support services form an essential segment, ensuring the continuous operation, upkeep, and efficient functioning of green data centers. These services encompass regular equipment checks, software updates, and proactive maintenance to maximize operational efficiency and minimize downtime. By focusing on predictive maintenance strategies and 24/7 support, these services aim to address issues swiftly and proactively, contributing to the sustainability and reliability of data center operations. Furthermore, the integration of eco-friendly practices within maintenance and support services aligns with the overall goal of reducing energy consumption and environmental impact.

Based on Data Center Size, the global market is segmented by Small and Medium-sized data centers, Large data centers.

Small and medium-sized data centers represent a significant sector within the green data center market, often catering to a diverse range of businesses and industries. These data centers typically adopt more adaptable and scalable solutions, focusing on energy efficiency and compact designs. They often leverage innovative cooling, power, and IT solutions tailored to their size and requirements. Their size allows for quicker implementation of green technologies and practices, making them agile in adopting the latest sustainable solutions.

Based on End-User, the global market is segmented by BFSI, IT and Telecom, Media and Entertainment, Healthcare, Government and Defense, Retail, Manufacturing, and other.

The BFSI sector heavily relies on data centers for critical operations and stringent data security. In the green data center context, the BFSI industry has been actively pursuing sustainable practices to reduce energy consumption and enhance operational efficiency. They prioritize high-security standards while adopting energy-efficient technologies in their data centers. Innovations in power utilization, cooling systems, and server efficiency are particularly crucial within this sector, ensuring uninterrupted services while minimizing the environmental impact, aligning with the industry's commitment to sustainability and corporate social responsibility.

Recent Developments

• October 2022- PhonePe, an indigenous fintech platform, introduced its first green data center in India, utilizing technologies and solutions by Dell Technologies and NTT. The facility offers PhonePe new data management opportunities, including efficient data security, power efficiency, operational simplicity, and cloud solutions.
• July 2023- Sparkle, the infrastructure division of Telecom Italia, inaugurated the Panama Digital Gateway, a 3.5MW facility that is the country's first "green data center."