Europe Data Center Colocation Market Outlook 2022-2027: Investments in Submarine Cable Projects, Connecting with Other Regions and Countries

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Dec 16, 2022, 05:45 ET

DUBLIN, Dec. 16, 2022 /PRNewswire/ -- The "Europe Data Center Colocation Market - Industry Outlook & Forecast 2022-2027" report has been added to  ResearchAndMarkets.com's offering.

The Europe data center colocation market will see the continuous adoption of cloud services among SMEs, with the heightened interest shown towards the digital transformation of businesses by adopting solutions such as IoT, big data, and artificial intelligence, attracting more investments into the Europe data center colocation market.

Organizations have a high demand for retail colocation services in developing countries. Enterprises with a limited budget and demanding geographical distribution capacities will drive the demand for retail colocation services. In 2021, Western European countries such as the U.K., Germany, Ireland, France, and the Netherlands were the leading markets that witnessed colocation investments in the European region. The western European region contributed over 75% of the Europe data center colocation market share.

The government's interest in promoting data center investments through land development, renewable energy procurement, and reducing electricity tariffs will drive the Europe data center colocation market during the forecast period. Mergers & Acquisitions and Joint Ventures (JV) will lead to the entry of new colocation data center operators into the countries across the Europe region, leading to significant investments during the forecast period.

Among colocation service providers, the major Europe data center colocation market growth contributors are Equinix, Digital Realty, Global Switch, CyrusOne, Scaleway Datacenter, Beyong.pl, Green Mountain, DigiPlex, Colt Data Centre Services, and Aruba, Rostelecom, which are spending millions of dollars for facilities development.

MARKET TRENDS & OPPORTUNITIES

Growing Adoption of Artificial Intelligence

Europe is one of the fastest growing countries regarding technological development and innovations. The adoption of artificial intelligence is fueling data generation and the technology market. The government takes initiatives for the growth and development of artificial intelligence. Innovation is being carried out by large-scale companies such as Siemens, Bosch, Rolls-Royce, and Airbus. Start-ups are also seen to be carried out DeepMind and FeatureSpace.

The compute load produces immense heat, which is to be reduced efficiently for the systems to run uninterruptably. Liquid-immersion systems and direct-to-chip cooling markets are seen strengthening their bonds through OEM. Many companies have set up their Research & Development centers for AI & other innovative applications in various European countries. For instance, AI-based R&D centers have been set up by multi-tech companies such as Samsung, Google, Oracle, and Huawei.

Increase in Sustainable Initiatives

Data centers are one of the major sources of carbon emissions worldwide. Operators are looking for sustainable initiatives to reduce the CO2 emissions generated by the centers. The European climate act was set up to make the continent carbon neutral by 2050. According to it, 75% of the total power supplied to the facilities will be carbon-free renewable energy by 2025 and 100% by 2030. The operators under the European climate act include Interxion (Digital Realty), Equinix, Scaleway Datacenter, OVHcloud, Aruba, and others.

Colt Data Centre Services stated in 2021 that their data centers are entirely running on energy produced by 100% renewable energy. Building centers certified as carbon-neutral is a trend known as a green data center which will contribute to the Europe data center colocation market. For instance, in July 2021, Maincubes announced the development of a green data center in Frankfurt, Germany, which uses free-cooling systems. European governments are also making heavy efforts toward resolving sustainability issues throughout the continent. For instance, The Government of the U.K. announced a law to help reduce CO2 emissions by around 78% by 2035.

Rising Colocation Data Center Investments

In November 2021, CyrusOne announced plans to build a data center in Frankfurt, Germany, with a power capacity of around 90MW. Also, in November 2021, CloudHQ announced the development of a facility in Paris with a power capacity of approximately 140 MW.

An increase in investments will help provide revenue opportunities to data center colocation and infrastructure providers worth billions of dollars. In April 2022, atNorth announced its plans to build a data center in Akureyri, Iceland, with a power capacity of 12MW and an area spanning 43,000 sq. ft. In June 2021, the Establishment of Norsk Datasenterindustri (Norwegian Data Center Industry) announced the data center industry in Norway. Under this association, operators such as Green Mountain and Digiplex with power companies such as Statkraft and Ringerikskraft.

Support Of The Governments For Colocation Data Centers

One of the essential enablers for facilities construction is tax incentives and breaks offered in states and countries across Europe, which helps yield high savings while incorporating other specified benefits. Most tax incentives are available in different countries, and further tax breaks will be concentrated on less developed countries to attract data center investments in the coming years.

REGIONAL ANALYSIS

The U.K. has multiple colocation providers such as Colt Data Centre Services, CyrusOne, Digital Realty, Echelon Data Centres, Equinix, Interxion (Digital Realty), and VIRTUS Data Centres, expanding their presence in the country. Colocation operators lead investments in the country. They are expected to grow further with several new project announcements.

The Europe data center colocation market is also witnessing investments in submarine cable projects, connecting with other regions and countries. In Germany, some of the submarine cables connecting the country include Atlantic Crossing-1, C-Lion1, CANTAT-3, Elektra-GlobalConnect1, Fehmarn Balt, GlobalConnect-KPN, and Germany-Denmark3.

Denmark is a developed country in terms of 5G connectivity as in major cities such as Copenhagen, Zealand, Odense, and Aarhus, telecom operators have deployed 5G services. Also, the country is one of the mature markets in the Nordics. According to the Nations International Telecommunications Union (ITU), the country offers robust fiber connectivity.

Finland's CSC announced a partnership with three Singapore-based entities, namely the National Supercomputing Centre, Singapore Advanced Research & Education Network, and the Quantum Engineering Programme of the National University of Singapore, to explore a high bandwidth research fiber optic link between Finland and Singapore, and implementation of quantum computing for data protection.

Italy has the presence of colocation service providers such as Equinix, ITnet, Telecom Italia Sparkle, Aruba, and others. The growth in digital infrastructure and artificial intelligence in Italy attracts cloud and colocation service providers to invest in the Europe data center colocation market.

VENDOR LANDSCAPE

Some significant vendors in the Europe data center colocation market include companies such as Aruba, atNorth, Colt Data Centre Services, CyrusOne, Digital Realty, Echelon Data Centres, Equinix, and Iron Mountain.

Several mergers and acquisitions occur among the colocation vendors in the Europe data center colocation market. For instance, In November 2021, Global Infrastructure Partners and KKR made an agreement to acquire CyrusOne for around USD 15 billion.

There is an immense focus on reducing energy consumption and carbon emissions by implementing sustainability in the data centers using free cooling, district heating, and others.

In March 2022, Orange and OVHcloud joined a project known as Distiller (recommenDer servIce for SusTaInabLe cLoud nativE software. This was done to reduce the facility's carbon footprint and environmental impact.

The high costs of procuring modern security systems will increase the Europe data center colocation market competitiveness. At the same time, the DCIM/BMS solutions will remain competitive by decreasing the OPEX of the facility.

Some of the significant initiatives done in the Europe data center colocation market are:

  • The Government of France reduced the taxes on electricity for data centers, which will attract further investments in the country.
  • In Switzerland, the Federal Act on Data Protection (FADP) includes adaptations to the GDPR, which helps attract further investments.
  • Norway is adopting four freedoms: the free flow of goods, capital, and services in European countries to encourage investments and trading.
  • The government has electricity tax exemptions for operators contributing to the district heating network in Finland.

Market Opportunities & Trends

  • Surge in Adoption of Artificial Intelligence
  • Rise in Adoption of District Heating System
  • Increase in Sustainable Initiatives
  • High Acceptance of Innovative Data Center Technologies
  • Increase in Adoption of Advanced It Infrastructure

Market Growth Enablers

  • Increasing Data Center Investments
  • 5G Deployments to Fuel Edge Data Centers
  • Growth in Cloud Service Adoption
  • Covid-19 Implications on Europe Data Center Market
  • Increasing Adoption of Big Data & Iot
  • Government Support for Data Center Market
  • Growing Submarine & Inland Connectivity

Market Growth Restraints

  • Security Challenges for Data Centers
  • Location Constraints for Data Centers
  • Lack of Skilled Data Center Professionals
  • Increase in Power Outages

Prominent Colocation Investors

  • 3data
  • 3S Group
  • AQ Compute
  • Artnet
  • Aruba
  • AtlasEdge
  • atNorth
  • Bahnhof
  • China Mobile
  • Colt Data Centre Services
  • CyrusOne
  • DigiPlex (IPI Partners)
  • Digital Realty
  • DATA4
  • Echelon Data Centres
  • EcoDataCenter
  • EdgeConneX
  • Equinix
  • Euclyde Data Centers
  • Global Switch
  • Iron Mountain
  • Green Mountain
  • IXcellerate
  • KDDI
  • Liberty Global
  • Magenta Telekom
  • MTS
  • Neterra
  • Netia
  • Nautilus Data Technologies
  • NDC-GARBE Data Centers Europe
  • NTT Global Data Centers
  • Orange Business Services
  • Proximity Data Centres
  • Pure Data Centres
  • Rostelecom Data Centers
  • Stadtwerke Feldkirch
  • T5 Data Centers
  • Telecom Italia Sparkle
  • Vantage Data Centers
  • Verne Global
  • VIRTUS Data Centres
  • VK Cloud Solutions
  • Yandex
  • Yondr

New Data Center Investors

  • ClusterPower
  • Global Technical Realty
  • Stratus DC Management

For more information about this report visit https://www.researchandmarkets.com/r/39kpf4


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