European Data Center Construction Industry to 2028: 5G Deployments Fuelling Data Center Investments

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Jun 12, 2023, 13:15 ET

DUBLIN, June 12, 2023 /PRNewswire/ -- The "Europe Data Center Construction Market - Industry Outlook & Forecast 2023-2028" report has been added to ResearchAndMarkets.com's offering.

The Europe data center construction market is expected to grow at a CAGR of 5.23% from 2022 to 2028.

Key Highlights

There is a high demand for retail colocation services in developing countries, driven by organizations with limited budgets and demanding geographical distribution capacities. Additionally, there is increasing demand for wholesale colocation services from cloud providers, enterprises, IoT, and big data organizations.
The UK, Germany, and France are among the top contributors to the Europe data center construction market in terms of investment, area, and power capacity. Western Europe led the way with a cumulative growth of over USD 57 billion during the forecast period. The presence of FLAP cities such as Frankfurt and Paris has attracted significant regional data center investments.
Germany leads the Europe data center construction market with an overall investment of more than USD 1.8 billion in 2022 and a cumulative growth of more than USD 12 billion expected during the forecast period.
The growth in data center development has led to increased competition among data center contractors implementing new sustainable methods. Operators are opting for these contractors to enhance their green credentials.
Labor shortages, budget constraints, and construction delays in certain regions drive significant greenfield and modular data center development growth. This has increased the revenue of modular data center solutions providers such as Vertiv, Dell, and HPE.
The government's interest in promoting data center investments through the land for development and renewable energy procurement, and reducing electricity tariffs, will drive the colocation market in Europe during the forecast period. The trend of procuring renewable energy to power data center facilities will likely continue, with several operators signing power purchase agreements with renewable energy companies.

Key Trends and Drivers

5G Deployments Fuelling Data Center Investments

The rapid deployment of 5G networks in European countries drives investments in data centers, particularly edge data centers.
In May 2022, Three UK, a UK-based operator, covered over 54% of the population with a 5G network available at 400 locations in over 3,000 sites. Vodafone UK also selected Oracle Communications in February 2022 to accelerate its standalone 5G network with the help of Oracle's cloud-native network policy management solution.
Orange Poland opened its 5G lab in Warsaw in April 2022, enabling businesses to develop advanced technologies for their growth.
In November 2021, the Hungary Innovation and Technology Ministry partnered with Huawei Technologies to develop 5G and fixed networks.

Increasing Cloud Services Adoption

European companies are mainly opting for a hybrid cloud approach by enjoying benefits offered by both public and private clouds, such as enhanced security. They are shifting their workloads to the cloud to strengthen their digitalization goals and enjoy cloud advantages. For instance, a Swedish bank migrated its services to the AWS cloud to analyze customer behavior and make data-driven decisions effectively.
Hyperscale cloud services providers such as AWS, Google, Microsoft, Oracle, and Meta are increasing their service capabilities for supporting businesses. For instance, in March 2022, the global cloud service provider, AWS, announced plans to invest over USD 2.3 billion in its data centers in the UK over the next two years.
In May 2022, the France Competition Authority announced the launch of a sector inquiry for the cloud computing market to determine the impact of the cloud on the competition.

Rising Awareness of Carbon-Neutrality

Europe has abundant renewable energy sources such as wind, geothermal, and hydro. Operators are aligning their goals to the carbon-neutral goals of the respective countries. For instance, Green Mountain, a colocation operator, uses 100% of renewable energy in its data center operations.
In April 2022, AWS announced renewable energy projects in France and other locations with a power capacity of around 3.5 GW. This renewable project is the second one from AWS in France, including one established earlier, with the total power capacity from the two projects being around 38 MW.
Denmark is setting up energy islands to harness the resources in the Baltics and will be the first in the world. They will have the capacity to not only supply Denmark but also supply neighboring countries.
European governments are releasing policies relating to sustainability and energy reuse. For instance, the Swedish government released energy policies such as the Electricity Certificate System to ensure energy is used through renewable energy sources such as solar, wind, hydro, or geothermal.
The Switzerland government's energy strategy and it expected to add 39 TWh of renewable energy by 2050. the government plans to provide tax incentives to support solar power expansion.

Growing Adoption of Artificial Intelligence

The growing adoption of artificial intelligence drives significant data generation and technology market expansion, creating an increased demand for data center construction.
Eurostat's report highlights Ireland as the leading country in Europe for businesses and enterprises utilizing AI/ML technologies in their infrastructure and applications.
Across Europe, several AI initiatives have been launched, including global partnerships, national strategies, and mission initiatives. For example, the French government invested USD 1.7 billion into its National Strategy for Artificial Intelligence.
Spain's National Artificial Intelligence Strategy is also part of the country's economic recovery and transformation plan, with an investment of approximately USD 720 million from 2021-2023.
The high adoption of AI/ML solutions drives the need for highly efficient cooling infrastructure, such as liquid cooling for supporting AI/ML workloads in High-Performance Computing (HPC). As a result, direct-to-chip and liquid-immersion cooling markets are forming strong partnerships through OEM.

Tax Incentives Boosting Data Center Construction

Several countries are offering tax incentives to local and global investors to facilitate the construction of data centers.
The government of Spain invests heavily in digitalization, with plans to invest around USD 720 million toward strengthening artificial intelligence. France has reduced taxes on electricity to attract data center investments, while the UK government has established a low % corporate tax rate of 20% - the lowest among G20 countries.
In Switzerland, the Federal Act on Data Protection (FADP) includes adaptations to GDPR, making it an attractive destination for data center investments. Meanwhile, France offers tax incentives of up to 30% for research and development, with a limit of USD 97.48 million.
The Dutch government is also actively working to position the country at the forefront of the European data center market, despite a sales and VAT rate of over 20%.

COMPETITIVE ANALYSIS

Several prominent companies, including Arup, AECOM, Ariatta, Caverion, Cowi, DPR Construction, Designer Group, Exyte, Kirby Group Engineering, Mercury, RED, Granlund Group, Turner & Townsend, and others, are major players in the Europe data center construction market. To provide reliable construction solutions, these vendors collaborate with data center operators. For example, Keysource provided planning, engineering, and construction services for edge data center construction at Namsos Datacenter (NDS).

Major Vendors

Prominent Support Infrastructure Providers

3M
ABB
Airedale International Air Conditioning
Aermec
Alfa Laval
Aksa Power Generation
Carrier
Caterpillar
Condair
Climaveneta
Cummins
D'HONDT THERMAL SOLUTIONS
Daikin Applied
Delta Electronics
Eaton
ebm-papst
EMICON INNOVATION AND COMFORT
Enrogen
FlaktGroup
Grundfos
Guntner
GESAB
HiRef
HITEC Power Protection
Honeywell International
Johnson Controls
KOHLER-SDMO
KyotoCooling
Legrand
Mitsubishi Electric
Munters
NetNordic
Nlyte Software (Carrier Global Corporation)
Perkins Engines
Piller Power Systems
Riello Elettronica (Riello UPS)
Rittal
Rolls-Royce
Schneider Electric
Siemens
Socomec
STULZ
Trane (Ingersoll Rand)
Vertiv
ZIEHL-ABEGG

Prominent Construction Contractors

AECOM
Altron
AODC
AEON Engineering
APL Data Center
ARC:MC
Ariatta
ARSMAGNA
Artelia
Arup
Aurora Group
Atkins
Basler & Hofmann
BENTHEM CROUWEL ARCHITECTS
Bouygues Construction
Callaghan Engineering
Cap Ingelec
Caverion
Coromatic
Collen
COWI
DataDome
Deerns
Designer Group
Dipl.-Ing. H. C. Hollige
Dornan
Etop
Exyte
DPR Construction
Eiffage
EYP MCF
Fluor Corporation
Ferrovial
Free Technologies Engineering
Future-tech
Granlund Group
GreenMDC
Gottlieb Paludan Architects
Haka Moscow
ICT Facilities
IDOM
IMOS
ISG
JCA Engineering
JERLAURE
Kirby Group Engineering
KKCG Group
Linesight
LPI Group
M+W Group (EXYTE)
Mace
Mercury
Metnor Construction
MT Hojgaard
Nicholas Webb Architects (NWA)
NORMA Engineering
Oakmont Construction
PM Group
PORR Group
PQC
Quark
Ramboll Group
RED
Reid Brewin Architects
Royal HaskoningDHV
Skanska
SPIE UK
Starching
STO Building Group
STRABAG
STS Group
Sweco
TECHKO
Tetra Tech
TPF Ingenierie
TTSP
Turner & Townsend
Warbud
Winthrop Engineering and Contracting
YIT
ZAUNERGROUP

Prominent Data Center Investors

3data
3S Group
Amazon Web Services
Artnet
Atman
Apple
Aruba
AtlasEdge
AQ Compute
atNorth
Bahnhof
Beyond.pl
China Mobile
Colt Data Centre Services (COLT DCS)
CyrusOne
DATA4
DigiPlex (IPI Partners)
Digital Realty
Echelon Data Centres
EcoDataCenter
EdgeConneX
Equinix
Euclyde Data Centers
Facebook (Meta)
Global Switch
Google
Green Mountain
Hyperco
Iron Mountain
IXcellerate
KDDI
Liberty Global
Magenta Telekom
Microsoft
MTS
Nautilus Data Technologies
NDC-GARBE Data Centers Europe
Neterra
Netia
NTT Global Data Centers
Orange Business Services
Proximity Data Centres
Pure Data Centres
Rostelecom Data Centers
Stadtwerke Feldkirch
T-Mobile
T5 Data Centers
Telecom Italia Sparkle
Vantage Data Centers
Verne Global
Virtus Data centers (ST Telemedia Global Data Centres)
VK Cloud Solutions
Yandex
Yondr

New Entrants

ClusterPower
Global Technical Realty
Stratus DC Management

KEY QUESTIONS ANSWERED:

1. How big is the Europe data center construction market?
2. What is the growth rate of the Europe data center construction market?
3. What is the estimated market size in terms of area in the Europe data center construction market by 2028?
4. What factors drive the Europe data center construction market growth?
5. How much MW of power capacity is expected to reach the Europe data center construction market by 2028?

Key Topics Covered:

1. Market at a Glance

2. Premium Insights

3. Market Opportunities & Trends
3.1. High Adoption of Artificial Intelligence
3.2. Increase in 5G Deployments Aiding in Growth of Edge Data Centers
3.3. Sustainability Initiatives Attracting Data Center Operators
3.4. Rise in District Heating Concept
3.5. Innovative Construction Techniques for Data Centers

4. Market Growth Enablers
4.1. Adoption of Cloud-Based Services to Drive Data Cen
4.2. Shift from On-Premises to Cloud and Colocation
4.3. Advent of IoT & Big Data Technologies
4.4. Government Support for Data Center Developments
4.5. Growing Submarine and Inland Connectivity
4.6. Adoption of Ocp and Hyperscale Infrastructure

5. Market Restraints
5.1. Supply Chain Disruptions Hampering the Growth
5.2. Concerns Over Carbon Emissions from Data Centers
5.3. Lack of Skilled Workforce Hampering Data Center Construction
5.4. Security Challenges Impacting Growth of Data Centers

6. Market Landscape
6.1. Market Overview
6.2. Investment: Market Size & Forecast
6.3. Area: Market Size & Forecast
6.4. Power Capacity: Market Size & Forecast

7. Facility Type

8. Infrastructure

9. Electrical Infrastructure

10. Mechanical Infrastructure

11. Cooling Systems

12. Cooling Techniques

13. General Construction

14. Tier Standards

15. Western Europe

16. Nordic

17. Central & Eastern European Countries

18. Competitive Landscape

19. Key Data Center Support Infrastructure Providers

20. Prominent Construction Contractors

21. Prominent Data Center Investors

22. New Entrants

23. Quantitative Summary

24. Appendix

For more information about this report visit https://www.researchandmarkets.com/r/r93xyc

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