Unveiling the Future: 2024 Data Center Predictions

Around this time of year, all my customers, colleagues, friends and family are wondering, "What will happen to the data center industry in Europe next year?!" Now I don't have a crystal ball, but here are five predictions for the data center industry in EMEA for next year:

1) AI will increase demand for data centers

Artificial Intelligence (AI) will ensure that (big) cloud players increase their demand for data center space and power. The explosion in demand for AI has significant implications for the data center industry. As AI technologies mature and become integrated across industries, the need for computing power, storage, and specialized infrastructure grows exponentially.

Data center providers, as the critical infrastructure behind the digital economy, must sharpen their expansion plans to provide their customers with sufficient capacity for power-hungry AI applications. The market is predicted to reach almost $2 trillion by 2030 – a twentyfold increase of 2021.

While there has been a lot of AI implementation in the US, we have not seen it to the same extent across Europe!! But this will change next year.

?

2) Introduction of alternative energy sources

Due to the increasing demand for electricity and today's grid problems, our industry will increasingly explore and adopt innovative methods and technologies for energy generation and storage. These solutions will integrate with the electricity grid and will achieve a crucial goal: reducing dependency on network suppliers. In addition, alternative battery technology (Battery energy storage systems (BESS)) will be used to reduce or eliminate the need for generators (example Microsoft). Fuel cells have already made their appearance here and there, parties are looking at fusion energy (which will take some time). The industry must innovate to continue to meet future demand.

?

3) Sustainability as a Strategy

Sustainability is important and will become even more important. As data centers continue to grow, they also consume more energy. Creating a Sustainable Strategy and creating clear and measurable sustainability objectives is a crucial step from a social perspective, but also necessary for obtaining permits and financing. Governments around the world are closely monitoring the development of data centers to address the sustainability issues arising from our energy-intensive facilities.

Investors understand that the impact of data centers on the environment and society is intertwined with their financial performance. This shift is fueling the proliferation of ESG-linked financial instruments, including term loans, incentivizing companies to achieve sustainability goals. It's not just a trend; it is a fundamental change in the way we approach investing and doing business. Therefore, it is necessary to make it part of the overall strategy

4) Rise of private and hybrid Cloud Solutions

I expect that in 2024 an even greater number of entities will turn to private (/hybrid) cloud infrastructures, driven by concerns about costs, complexities and associated loss of control. The emphasis will shift to adopting hybrid IT solutions, using your own IT equipment within data centers (colocation) and integrating public cloud applications.

Hybrid cloud configurations offer organizations the benefits of both domains: the familiarity and customization of an on-premise environment, coupled with the scalability and innovative features inherent in cloud computing including the AI capabilities offered.

Entities that embrace hybrid cloud frameworks can combine public and private clouds with on-premise infrastructure, allowing them to leverage the unique benefits of each environment. Additionally, hybrid cloud setups support emerging technologies such as edge computing, providing solutions to challenges that on-premise systems may find more challenging to address.

5) Prices keep… RISING!

This doesn't sound crazy, right?

Given the current market conditions (availability of power, space and the time required to obtain a permit), which prevent the industry from meeting the enormous demand, prices will rise – and continue to rise. Currently, data center vacancy rates in key markets are at historic lows. Plots with electricity are scarce, the costs of critical infrastructure are high, and the data center industry is also confronted with rising interest costs. I don't expect this to change in the short term.

Disclaimer: I may not have a crystal ball, but I do have over 25 years of experience in both the data center and IT industries. However, it is still important to note that these are nothing more than educated guesses.