Europe Data Center Construction Market - Industry Outlook & Forecast 2023-2028

Europe Data Center Construction Market - Industry Outlook & Forecast 2023-2028
The Europe data center construction market is expected to grow at a CAGR of 5.23% from 2022 to 2028.

KEY HIGHLIGHTSThere 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 & DRIVERS
5G Deployments Fuelling Data Center InvestmentsThe 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 AdoptionEuropean 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-NeutralityEurope 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 IntelligenceThe 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 ConstructionSeveral 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 ANALYSISSeveral 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 Providers3MABBAiredale International Air ConditioningAermecAlfa LavalAksa Power GenerationCarrierCaterpillarCondairClimavenetaCumminsD’HONDT THERMAL SOLUTIONSDaikin AppliedDelta ElectronicsEatonebm-papstEMICON INNOVATION AND COMFORTEnrogenFlaktGroupGrundfosGüntnerGESABHiRefHITEC Power ProtectionHoneywell InternationalJohnson ControlsKOHLER-SDMOKyotoCoolingLegrandMitsubishi ElectricMuntersNetNordicNlyte Software (Carrier Global Corporation)Perkins EnginesPiller Power SystemsRiello Elettronica (Riello UPS)RittalRolls-RoyceSchneider ElectricSiemensSocomecSTULZTrane (Ingersoll Rand)VertivZIEHL-ABEGGProminent Construction ContractorsAECOMAltronAODCAEON EngineeringAPL Data CenterARC:MCAriattaARSMAGNAArteliaArupAurora GroupAtkinsBasler & HofmannBENTHEM CROUWEL ARCHITECTSBouygues ConstructionCallaghan EngineeringCap IngelecCaverionCoromaticCollenCOWIDataDomeDeernsDesigner GroupDipl.-Ing. H. C. HolligeDornanEtopExyteDPR ConstructionEiffageEYP MCFFluor CorporationFerrovialFree Technologies EngineeringFuture-techGranlund GroupGreenMDCGottlieb Paludan ArchitectsHaka MoscowICT FacilitiesIDOMIMOSISGJCA EngineeringJERLAUREKirby Group EngineeringKKCG GroupLinesightLPI GroupM+W Group (EXYTE)MaceMercuryMetnor ConstructionMT HojgaardNicholas Webb Architects (NWA)NORMA EngineeringOakmont ConstructionPM GroupPORR GroupPQCQuarkRamboll GroupREDReid Brewin ArchitectsRoyal HaskoningDHVSkanskaSPIE UKStarchingSTO Building GroupSTRABAGSTS GroupSwecoTECHKOTetra TechTPF IngénierieTTSPTurner & TownsendWarbudWinthrop Engineering and ContractingYITZAUNERGROUPProminent Data Center Investors3data3S GroupAmazon Web ServicesArtnetAtmanAppleArubaAtlasEdgeAQ ComputeatNorthBahnhofBeyond.plChina MobileColt Data Centre Services (COLT DCS)CyrusOneDATA4DigiPlex (IPI Partners)Digital RealtyEchelon Data CentresEcoDataCenterEdgeConneXEquinixEuclyde Data CentersFacebook (Meta)Global SwitchGoogleGreen MountainHypercoIron MountainIXcellerateKDDILiberty GlobalMagenta TelekomMicrosoftMTSNautilus Data TechnologiesNDC-GARBE Data Centers EuropeNeterraNetiaNTT Global Data CentersOrange Business ServicesProximity Data CentresPure Data CentresRostelecom Data CentersStadtwerke FeldkirchT-MobileT5 Data CentersTelecom Italia SparkleVantage Data CentersVerne GlobalVirtus Data centers (ST Telemedia Global Data Centres)VK Cloud SolutionsYandexYondrNew EntrantsClusterPowerGlobal Technical RealtyStratus DC ManagementThe report includes the investment in the following areas:

Facility TypeColocation Data CentersHyperscale Data CentersEnterprise Data CentersInfrastructureElectrical InfrastructureMechanical InfrastructureGeneral ConstructionElectrical InfrastructureUPS SystemsGeneratorsTransfer Switches & SwitchgearsPDUsOther Electrical InfrastructureMechanical InfrastructureCooling SystemsRacksOther Mechanical InfrastructureCooling SystemsCRAC & CRAH UnitsChiller UnitsCooling Towers, Condensers & Dry CoolersEconomizers & Evaporative CoolersOther Cooling UnitsCooling TechniqueAir-based Cooling TechniqueLiquid-based Cooling TechniqueGeneral ConstructionCore & Shell DevelopmentInstallation & Commissioning ServicesEngineering & Building DesignFire Detection & SuppressionPhysical SecurityDCIM/BMS SolutionsTier StandardsTier I & Tier IITier IIITier IVGeographyWestern EuropeNetherlandsU.K.GermanyFranceNetherlandsIrelandSwitzerlandItalySpainBelgiumPortugalOther Western European CountriesNordicsDenmarkSwedenNorwayFinland &IcelandCentral and Eastern European CountriesRussiaPolandAustriaCzech RepublicOther Central & Eastern European CountriesKEY 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?