The power conundrum
92 percent of respondents now say that power availability is more important than the location of new projects.
Equally, energy consumption and efficiency ranks as the top concern for data centre developers.
The power challenge is not new, but the problem is deepening as demand surges, competition intensifies and sustainability concerns come to the fore. Now more than ever, the data centre industry needs to bring forward new solutions to mitigate power constraints.
Figure 4
What is your organisation’s top concern regarding data centre operations?
Figure 5
Rank the effectiveness of the following in helping to mitigate DC power constraints (1 = most effective)
The majority of survey respondents deem investment in upgrading grid infrastructure to be the most effective and important action needed to meet demand. This is clearly going to be a key part of the equation; however, electricity grid upgrades in markets like the UK and US can take between five and 15 years to plan and deliver. Often, these timelines simply do not align with the aggressive schedules for data centre construction.
Where possible, investors may look to new markets where power is more attainable. However, data sovereignty requirements can often prevent this.
Some businesses are choosing to invest in alternative sources of energy to support the overall expansion of power capacity in key regions. Examples of this include Oracle’s recent announcement that it will utilise nuclear power solutions, and the power deal between Constellation Energy and Microsoft aiming to utilise a unit of the Three Mile Island nuclear plant in Pennsylvania.
Public opinion wavers
Political and public opinion in some regions remains a challenge to growth. Protests are on the rise against new data centres in traditionally hot markets across the US, Europe and Asia from Northern Virginia to the Netherlands.
In Ireland, public debate on how much energy data centres consume has led to politicians opposing new schemes, including public calls from the Labour and Green parties for a moratorium on new projects. In the wake of high-profile investment announcements from multiple data centre end users which exclude any plans in Ireland, more balanced debates are getting underway on the energy infrastructure actions required for the country to continue benefiting from the jobs and investment that flow from the sector.
Multiple high-profile data centres across Europe have also had planning permissions rejected in the past 12 months, with power demand being the main blocker. The same reasoning, alongside potential environmental impact, was used to block a data centre in Nagareyama city, Tokyo, late last year, and local protests against other Tokyo data centres broke out this summer.
In contrast, the UK government has officially recognised data centres as ‘CNI – critical national infrastructure’, boosting confidence in data centre investment within the country, with providers such as Equinix playing a part in the consultation process towards this decision.
There is also more of a move globally for data centre owners and operators to demonstrate the contributions they make to the economies and communities they operate within. Major players such as Amazon and Microsoft are proactively pointing to the tens of thousands of jobs their centres will create, and Quantum Loophole in Maryland, USA, is donating 500 acres of new green space to the local community alongside its new data centre developments.
Supply chain strains
Constrained supply chains across the sector mean that almost 80 percent of respondents are reporting delays to manufacturing or delivery of critical equipment.
Despite the supply chain bottlenecks caused by the pandemic having now faded, the data centre industry is still facing long lead times.
As acquisitions and mergers continue, the biggest players have the buying power to block-book manufacturing slots years in advance. This is, however, making it more difficult for newer market entrants to deliver a competitive delivery schedule.
Figure 6
My projects/programmes have struggled to secure the preferred manufacturing slots for critical equipment in the past 12 months
Figure 7
My projects/programmes have experienced delays on the agreed manufacturing/delivery dates for critical equipment in the past 12 months
Our five top tips:
Ways to navigate supply chain bottlenecks
- Get closer to suppliers and strengthen relationships at every stage of the chain – talk to them to understand their constraints and identify potential issues ahead of time.
- Balance risk with your suppliers, agreeing contracts that both provide both sides with buffers and reassurance. This will reduce the chance of insolvencies in the supply chain which could derail projects.
- Embrace the use of data and digital tools to better track project performance and gain easier visibility across the supply chain.
- Diversify the supply chain to reduce the risk of a single point of failure.
- In a competitive contracting market, make your business an appealing partner to work with and ensure a positive reputation. For example, by swiftly paying invoices or being a leader on social value and sustainability.
