Guest blog: What does the data centre industry have in store for 2024 and beyond?
Data Centers will Continue to Respond to the Acceleration of AI
The past year witnessed an unprecedented acceleration of AI, confirming the technology’s potential to reshape and impact every sector of society. As AI workloads grow in size and complexity, the need for data storage increases exponentially, and so will the need for the industry to prepare for the resulting impact this will have on data centres.
This growth of AI in Europe, driven by inference, will call for a more localised and distributed demand in the European market, and will require additional compute power, a challenge the region will need to tackle in the coming year. The growth of AI will thus largely, if not wholly, depend on the ability of data centres and power infrastructures to meet this demand.
An additional factor driving the migration of training models from the US to Europe is data localization laws, mandating the storage and processing of data within the country or region of origin. Changes in these regulations may prompt Europe to reassess its approach, as the region currently lacks sufficient power infrastructure for large-scale model training. Europe will either need to reinforce existing locations or establish new ones near robust power sources.
Responding to Legislative Changes
The revised EU Energy Efficiency Directive (EED) entered into force last year, initiating mandatory reporting for energy use and emissions from data centres exceeding 500k in the region. However, as a Directive, EU member states are required to enact it in their own way within their own laws.
Germany led the way by passing more stringent requirements and penalties through the Energy Efficiency Act (EnEfG) in late 2023, including Power Usage Effectiveness (PUE) of less than 1.2 for new data centres opening on or after July 2026. In the coming year, we expect to see other EU countries determining whether they will align directly with the EU Energy Efficiency Directive or if they will opt for a harder stance, similar to Germany; nevertheless, their decisions will have long-term ramifications for the industry.
2024 will see an Increase in On-Site Generation Solutions
Even before the emergence of AI, concerns were materialising that data centre power demand was unlikely to be met by existing power grids in the short to medium term. The simultaneous surge in demand for grid connections from data centres, solar farms, battery storage, and wind farms poses a significant challenge to existing substations. We anticipate the solution to go in one of two directions:
- A consolidation of the connections and colocation of data centres with the solar farms, battery storage and wind farms to reduce the overall number of connections to the grid.
- An increase in self generation with the grid as a backup on a flexible connection agreement.
We also expect to see advancement around the generation of green hydrogen from surplus wind farm power or excess energy. This would enable on-site generation schemes, or local micro grids in conjunction with other local consumers for both electricity and heat recovered from the servers in the data centre. The power grid expansion, necessary for traditional utility grid connections, has an 8-10 year lead time, and whilst we may not see hydrogen solutions fully deployed in 2024, we expect considerable movement as a result.
The industry faces a transformative year ahead as it will need to tackle the escalating impact of AI acceleration and the anticipated surge in on-site generation solutions to meet new power demands. In the near future, we will also witness Europe’s response to regulatory changes, which will affect the industry as a whole. Overall, 2024 promises to be an exciting year, and will likely witness an evolution of the relationship customers have with data centre providers, working together to identify innovative solutions amidst rising demand and regulatory changes.
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Authors
Matt Pullen
In his role as Executive Vice President and Managing Director, Europe, Matt is responsible for driving the growth of CyrusOne’s operations in Europe and delivering the very best in data centre excellence to CyrusOne’s hyperscale and enterprise customers worldwide.