Data centre market determined less by demand but the ability to deliver  

You don’t need to be working in the built environment to appreciate the rapid growth of the data centre market. Yet as RLB’s head of advance tech, I see it every day through extensive planning activity, competition for land and the increasing pressure on power and infrastructure. Our recent Data Centre Trends Report reinforces the scale of this growth with operators expected to commission a staggering 319% increase in capacity (2023-2026). What is clear is that for us to meet that demand, we have to be able ability to deliver at scale. 

We expected AI to be the primary driver of the market’s growth, and it was, with 45% of those surveyed quoting it as a key factor. But more than previous years, we are seeing growth being broader based with 5G/6G (41%) and cloud computing (38%), high performance computing (33%) and sustainable IT (32%) also cited. 

Our findings capture a moment in time, but the trends, now covering the last three years that we have been surveying the market, show that delivery constraints are the critical factor that could slow down the growth of our European digital infrastructure, with access to power, permitting delays and renewed pressure on materials, equipment and specialist labour, key components of this delivery.   

Middle East impact on the data centre sector  

This research took place before the Middle East conflict, but reflects a similar wave of uncertainty that we have seen across the three years of our reporting, with the ongoing conflict in Ukraine, US tariffs and the impact of other international events that the industry continues to navigate. Not surprisingly, stakeholders have increased their appetite for collaboration and learnt some strategies, such as risk sharing, to mitigate supply chain disruptions or delays, with 42% of operators saying they have already entered risk sharing partnerships, and 64% of those surveyed believe that collaboration between developers, OEMs and energy providers will unlock new energy capacity.    

The impact of the latest conflict of course will depend on how quickly the current situation is resolved, while currently there is little direct impact on material or equipment prices for projects being tendered or underway, there have been immediate impacts in the form of longer transit times and increased shipping costs, as major freight continues to avoid the region and transport materials around the Cape of Good Hope. However, it is important to recognise that many underlying conditions are more positive today than during previous shocks.   

Relocation is likely to find energy supplies   

Energy strategy remains central to development strategy. Securing grid connections, negotiating private power arrangements and exploring co-location with generation or storage assets are now commercial imperatives. Some 63% of respondents also agreed that data centres will increasingly relocate with other advanced facilities such as semiconductor fabrication plants, AI/quantum labs and clean energy storage sites.    

There is also a predicted growth in alternative energy sources, with 69% of those questioned quoting private PPAs, on-site solar and battery storage expected to help reduce reliance on constrained public grid infrastructure in the next three years.   

Across Europe, markets beyond the traditional FLAP-D core are rising in prominence with power and permit availability and long-term sustainability key, with the Nordics, Spain, Italy and Poland becoming popular location choices.   

Deployment of sustainable energy sources limited 

Interestingly, although energy strategies are a key priority, deployment of alternative sustainable energy sources, such as renewables is limited. While sustainability expectations from regulators, investors and customers continue to intensify, less than half surveyed (41%) have already adopted sustainability measures. 

Price increases are expected, and penalties for late delivery are significant   

Price increases continue to rise as AI driven demand impacts the supply chain and inflation rises. The highest price increases are expected for battery energy storage systems (BESS) at a 4.3% increase, copper cable 4% and CRAC/CRAH at 3.7%.   

There is no doubt that we are at the cusp of a new infrastructure cycle, and the scale and complexity of projects is increasing risk concentration. Those organisations that will succeed in this new era are those that industrialise delivery – who work with trusted partners to navigate risk and pre-empt challenges ahead, and who are investing in data-driven site selection to reduce power and permitting risk.