Data Center Liquid Cooling Market to Reach $39.96 Billion by 2033, Driven by Increased Data Center Spending and Operational Cost Reductions

DUBLIN, March 7, 2024 /PRNewswire/ -- The "Data Center Liquid Cooling Market - A Global and Regional Analysis: Focus on Product, Application, and Country Analysis - Analysis and Forecast, 2023-2033" report has been added to ResearchAndMarkets.com's offering.

The global data center liquid cooling market, valued at $4,457.2 million in 2023, is expected to reach $39.9 billion by 2033, exhibiting a robust CAGR of 24.53% during the forecast period 2023-2033. The growth in the global data center liquid cooling market is expected to be driven by increased data center spending and reduction in operational costs for data centers.

In today's digitally driven world, data centers are the backbone of the global economy, powering everything from cloud computing to online services. However, the exponential growth of data processing and storage demands has led to an unprecedented challenge: heat management. To address this, the data center liquid cooling market has emerged as a dynamic and essential sector within the technology industry.

In a data center, the heat generated by the IT equipment is absorbed by the liquid coolant, which then circulates through a cooling system, where it releases the heat to the outside environment.

Liquid cooling solutions are revolutionizing data centers by efficiently dissipating heat generated by high-performance servers and equipment. This market is driven by a compelling need for energy-efficient and sustainable cooling methods to optimize data center operations. As the demand for data continues to surge, businesses and data center operators are turning to innovative liquid cooling technologies to enhance performance, reduce operating costs, and minimize environmental impact.

The market's expansion is influenced by a multitude of significant factors. These include the escalating worldwide need for energy-efficient and robust data center cooling solutions, increasing penetration of the internet, cloud computing, and technologies such as AI, IoT, and big data. As a cumulative effect, these factors are projected to drive the increased adoption of data center liquid cooling.

IT and Telecom Industry to Dominate the Global Data Center Liquid Cooling Market (by End Use Industry)

During the forecast period 2023-2033, the IT and Telecom segment is expected to dominate the market. With the introduction of new technologies such as 5G, IoT, virtual and augmented reality, and artificial intelligence, the IT and telecommunications industry is evolving to cater to huge data processing. As a result, telecom data centers are also transforming to handle high data volume and low latency needs. The banking, financial services, and insurance (BFSI) segment is expected to anticipate the highest growth rate due to being digitized, which involves utilizing the most cutting-edge technology, which will boost the data center usage, thereby augmenting the data center liquid cooling market.

During the forecast period, Europe, North America, and Asia-Pacific are projected to witness substantial demand for data center liquid cooling. The increasing government regulations and the consequent expansion of the data center industry are expected to create favorable conditions for the adoption of liquid cooling.

The utilization of liquid cooling is witnessing a notable expansion in Europe, North America, Asia-Pacific, and China. This growth can be attributed to heightened research and development activities, alongside a competitive environment that fosters innovation, infrastructure modernization projects, climate challenges, energy efficiency mandates, AI and HPC expansion, digital economy development, and strict data privacy and security requirements are all contributing to the growth of data caused by smartphones and the Internet of Things is driving the adoption of data center liquid cooling, consequently stimulating market growth.

Market Drivers: Increasing Data Center Spending

The exponential growth in data generation and utilization across diverse sectors has significantly boosted the demand for data servers and data centers. CloudScene data reveals that as of January 2021, almost 8,000 data centers were operational in 110 countries. The United States leads with 33% of these centers, followed by the United Kingdom (5.7%), Germany (5.5%), China (5.2%), Canada (3.3%), and the Netherlands (3.4%). Approximately 77% of these data centers are in countries that are members of the Organization for Economic Co-operation and Development (OECD), such as France, Greece, Hungary, Iceland, and Ireland. Additionally, about 64% are situated in North Atlantic Treaty Organization (NATO) countries, including Denmark, Croatia, and the Czech Republic.

The U.S. market experienced a substantial increase in data center capacity, with a record absorption of 493.4 megawatts (MW) in 2021, as reported by Coldwell Banker Richard Ellis (CBRE). This marks a 31% increase from the previous high in 2019 and a 50% rise from 2020. Jones Lang LaSalle Inc. (JLL) also noted a significant uptick in data center absorption, which reached 885.7 MW across 14 domestic markets in 2021, driven largely by expansions of major cloud and technology firms. This represents a 44.3% year-on-year increase.

The future outlook for data centers remains positive, fueled by the surge in data usage. Factors such as the continued popularity of streaming services, virtual collaboration tools, and remote working have led to unprecedented demand for data centers in 2020 and 2021. This demand resurgence is particularly notable among top global data center operators, who are witnessing increased enterprise-level demand from sectors such as technology, finance, and healthcare.

Market Challenges: High Investment Costs

Investing in liquid cooling technologies for data centers presents a significant financial challenge, often hindering their adoption by operators who currently rely on traditional cooling methods. The substantial initial investment required for liquid cooling systems, including the need for specialized infrastructure and equipment, serves as a major barrier for many businesses considering an upgrade to their data center cooling systems.

In terms of cost implications:

• Electricity expenses can make up more than half of the operating costs in conventional data centers.
• Cooling operations alone can represent up to 43% of a data center's total power usage.
• Transitioning to more efficient cooling solutions like liquid cooling entails high upfront costs (capital expenditure or CAPEX) and could lead to increased operational costs (operational expenditure or OPEX), particularly due to the use of costly coolants such as dielectric fluids and fluorocarbons.

Market Opportunities: Increasing Efficiency of Existing Data Centers

The typical lifespan of a data center is around 9-10 years, after which it tends to become outdated, though upgrades can extend its usability. Many older data centers may not be fully compatible with modern liquid cooling technologies. However, the opportunity to retrofit these older infrastructures presents a significant market for liquid cooling solutions in data centers.

The key drivers for retrofitting data centers include increasing IT densities, new technological developments, aging hardware, the need for improved cooling systems, and the demand for energy-efficient and power-saving solutions. Even recently built cloud or hyper-scale data centers are undergoing retrofits to meet these needs. The process of updating operational data centers is highly complex, often more so than designing and constructing new facilities. Consequently, retrofitting has become an increasingly attractive option for data center operators in the forecast period.

Many data centers constructed in the last decade are now undergoing modernization to enhance efficiency and adapt to technological innovations driven by AI, IoT, and other digital advancements. For retrofitting, upgrading electrical components is often more feasible than server virtualization, which can be costly and labour-intensive. Switching to liquid cooling systems in data centers offers immediate benefits, including reduced electrical failures and heat emissions. Efficiency gains, often achieved through relatively simple modifications, can lead to a decrease of up to 40% in cooling costs and electricity consumption.

Key Market Players and Competition Synopsis

The global data center liquid cooling market is a dynamic and rapidly evolving market, characterized by a blend of established companies and emerging innovators, each bringing unique technologies and strategies to meet the escalating demand for energy-efficient, high-performance cooling solutions in data centers worldwide. Driven predominantly by technological innovation, these companies are continuously developing new and improved cooling systems to enhance efficiency and minimize environmental impact.

The companies are putting emphasis on delivering customizable and scalable solutions to accommodate the varying requirements of data centers, from modest operations to large, intricate facilities. Moreover, the market is witnessing a trend of strategic partnerships and collaborations, as companies seek to expand their market presence and leverage collective technological expertise, further intensifying the competition and fostering growth in this sector.

Some of the prominent companies in this market are:

• Vertiv Group Corp.
• GRC, Inc.
• Iceotope
• LiquidStack Holding
• Submer
• Coolcentric
• Motivair
• PEZY Computing Inc.
• DCX Inc.
• Asetek, Inc.
• Chilldyne

Key Topics Covered:

1 Market: Industry Outlook
1.1 Trends: Current and Future Impact Assessment
1.1.1 Trends Shaping Data Center Liquid Cooling Market

• Efficient Cooling Systems
• Renewable Energy for Data Centers
• Increased Data Requirements
• Surge in Investments toward Data Center Cooling Innovations
• Data Center Power Consumption Scenario

1.2 Supply Chain Overview
1.3 Market Dynamics: Overview

Market Drivers

• Increasing Data Center Spending
• Growing Need for Hyperscale Data Centers
• Reduction in Operational Costs

Market Restraints

• High Investment Costs
• Alternative Technologies Existing in the Market

Market Opportunities

• Retrofitting Opportunities
• Growth in Penetration Rate of Internet and Cloud Services

1.4 Data Center Dielectric Fluid Market Outlook
1.5 Data Center Liquid Cooling- Case Studies

• Comparative Analysis of Air-Cooled and Liquid-Cooled Systems in High-Capacity Data Centers
• Capital Expense Comparison - Facility and IT Load for Both Air-Cooled and Liquid-Cooled Data Center
• Optimizing Data Center Efficiency, Strategy with AMD EPYC Processors, and Immersion Cooling
• Colovore Implements Liquid Cooling Solution, Offering Rack Capacities of up to 50 kW
• PeaSoup's Sustainable Data Center Solution

2 Application
2.1 Application Segmentation
2.2 Application Summary
2.3 Global Data Center Liquid Cooling Market (by Application)

3 Products
3.1 Product Segmentation
3.2 Product Summary
3.3 Global Data Center Liquid Cooling Market (by Product)

4 Regions
4.1 Regional Summary
4.2 North America
4.3 Europe
4.4 U.K.
4.5 Asia-Pacific
4.6 China
4.7 Rest-of-the-World

5 Markets-- Competitive Benchmarking & Company Profiles
5.1 Strategic Initiatives, 2020-2023
5.2 Market Share
5.3 Company Profiles

For more information about this report visit https://www.researchandmarkets.com/r/15ci7y

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