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How Data Centers Can Balance Growth and Sustainability

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Fueled by the enormous demand of digital services, the data center industry is at the forefront of the global digital economy, experiencing unprecedented growth and transformation. With this expansion, sustainability emerges as a key focus due to the industry’s significant electricity use, prompting a shift towards renewable energy sources to reduce its energy consumption and carbon footprint.

What are Data Centers?

Data centers are facilities that house the computer systems, telecommunications, and storage solutions that power our connected world. They are essential to the digital economy, facilitating the seamless operation of all digital activities. Their developers and operators include a variety of entities, such as technology companies, real estate firms, telecom providers, cloud service providers, and colocation providers.

Data Center Hubs around the World

The appetite for data center services is growing at an explosive rate, with JLL forecasting the market to reach $174 billion by 2024, propelled by a 14.7% compound annual growth rate. Driven by advancements in cloud computing, artificial intelligence, big data, and IoT, this boom now requires robust IT infrastructure to manage the enormous data volumes and computing requirements. The United States is currently the largest data center market worldwide, with Northern Virginia and Silicon Valley as its main hubs. In Asia Pacific, Singapore leads the way, with more than 60 facilities and around one square kilometer. In Europe, the UK and Germany are the largest data center markets, accounting for 40% of the total capacity, followed by Amsterdam, Paris, Dublin, and Madrid.

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In 2018, the total energy consumption of EU data centers was 76,8 TWh. This is expected to rise to 98,5 TWh by 2030—a 28% increase. To put things into perspective, in 2018, data centers accounted for 2,7 % of total electricity demand across the Union, and the number is expected to reach 3,2 % by 2030 if the current trend continues.

Governmental Incentives

To foster growth in this sector, governments worldwide are offering incentives—including tax breaks, reduced power costs, and grants—aiming to make their regions attractive for data center investments. Ireland, the Nordics, and certain US states have emerged as preferred locations, thanks to their strategic initiatives to draw in developers with the promise of economic and infrastructural benefits.

Mandatory Disclosure in the EU

However, the sector’s substantial electricity demand cannot be ignored. As early as 2020, the European Commission highlighted the need for highly energy-efficient and sustainable data centers in its digital strategy report, ‘Shaping Europe's digital future’.  The European Union’s Energy Efficiency Directive (EED), a comprehensive legislative framework aimed at reducing energy consumption and promoting energy efficiency across various sectors in the EU, highlights the efforts that need to be made in data centers in its 2022 recast. The key measures for data centers include:

These come in addition to general energy efficiency measures aimed at reducing the overall energy consumption of data centers—such as optimizing cooling systems or using more energy-efficient equipment.

Green Data Centers

Amid growing environmental concerns, the data center industry is increasingly turning to renewable energy sources for powering their operations. Innovations in data center development aimed at enhancing energy efficiency—such as advanced cooling systems, increased rack density, and modular construction—are gaining traction, aligning with the industry's sustainability objectives. Moreover, tech giants like Google, Microsoft, and Amazon are already securing vast amounts of renewable energy through PPAs, VPPAs, or EACs to run their global data centers sustainably. Solar, wind, hydro, and biomass are among the leading options adopted to diminish the sector's environmental footprint.

As digitalization increasingly permeates society, the demand for data center services is expected to surge, alongside innovation and environmental responsibility. With a variety of renewable energy procurement and optimization strategies available in the market, the future of this industry is not only bright but also sustainable, highlighting the industry's dual commitment to expansion and eco-friendly solutions.

Discover how STRIVE by STX can help your data center optimize its electricity with our Energy Efficiency and Renewable Electricity solutions.

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