November 30, 2023
The UK’s data centre sector is experiencing a robust growth rate of 5.5% annually, significantly outpacing numerous other segments of the nation’s economy. This expansion is characterised by the rapid construction of new facilities, with the UK emerging as a key player on the global stage. However, these developments are not without their unique set of challenges and opportunities.
Current Landscape of UK Data Centres
In a 2022 analysis, the UK was ranked third globally in terms of data centres, trailing the US and closely competing with Germany. This ongoing construction of new data centres is stimulating growth in construction, IT, and other industries. According to Statista, the UK’s market growth rate surpasses many other nations, and recent data suggests the UK may now surpass Germany, securing the second position worldwide.
Growth Drivers in the Market
The expansion of the UK’s data centre market is influenced by several global factors. A key driver is the rising adoption of cloud-based solutions, which, according to one analysis, are growing at a global rate of 18%. Additionally, the Internet of Things (IoT) plays a significant role; currently, there are about 13 billion IoT-connected devices, a figure expected to double by 2030.
Contractual models in the data centre market are also evolving, with options like colocation gaining popularity. In colocation, server owners opt to rent space instead of managing their own facilities. As a result, there’s an increase in the construction of data centres specifically designed for colocation purposes.
What is Causing The UK’s Success in Data Centres?
Reasons for the UK’s Success as a Data Centre site include:
- Telecommunications Hub: The UK serves as a critical hub for both transatlantic and European telecommunications cabling, providing robust connectivity options.
- Cybersecurity Excellence: A notable report ranks the UK’s cybersecurity as the best globally, bolstering its appeal as a secure location for data centres.
- Business-Friendly Environment: The UK is known for its strong rule-of-law frameworks and business-friendly policies, alongside reliable energy security, making it an attractive location for data centre operations.
- Finance Sector Influence: Being an international finance centre, the UK houses extensive data due to the significant needs of the finance sector.
- Climate Advantage: The cooler climate of the UK is beneficial for data centres, reducing the need for extensive artificial cooling.
- Infrastructure Development: Despite currently lagging in average download speeds compared to some European neighbours, ongoing investments in fibreoptic infrastructure are bridging this gap. This expansion not only facilitates catch-up but also drives growth in the data centre sector.
Is This Success Likely to Continue?
The future success of the UK in the data centre sector is not entirely certain. Projections extending a few years ahead have considered potential challenges, but the long-term impact of these issues is less predictable. Key factors influencing the UK’s data centre market include:
Economic and Political Factors: The UK’s overall economic growth is sluggish, and the potential impacts of Brexit on the data centre industry are still uncertain. This ambiguity may influence whether providers decide to relocate resources to other European locations.
National Security and Investment Act 2021: This legislation grants the UK government extensive authority to scrutinise investments, particularly in data infrastructure. The impact of this act on foreign investment is a matter of debate among analysts, dependent on how actively the government exercises these powers.
Implications for Construction
The construction of data centres in the UK remains robust. While London is a key hub, it represents only a minority of the national total, indicating a diverse geographical spread. Data centres vary significantly in size, from small facilities with around 1,000 servers to larger ones housing approximately 100,000 servers.
However, the UK construction industry is currently grappling with material and skill shortages, particularly among specialised subcontractors. It’s crucial for projects to initiate planning and communication early to mitigate risks related to cost escalation, scheduling conflicts, or compromised quality. Additionally, when considering brownfield sites for cost savings, thorough evaluation of remediation time and costs is essential.
Constructing data centres is a demanding endeavour that necessitates meticulous planning and a focus on detail. Critical aspects include:
Structural Considerations: Data centres require floors capable of supporting extraordinary weights, posing significant civil engineering challenges.
Fire Safety: Given the sensitive equipment housed within, stringent fire safety measures and compliance are paramount.
Electrical Demands: These facilities consume substantial electricity, often necessitating enhancements to the local power infrastructure. In some cases, owners construct their own substations to guarantee a steady and sufficient power supply.
Cooling Requirements: A significant portion of the power is allocated for cooling systems. The installation of these systems can involve high-risk activities, including handling water and lifting heavy specialist equipment.
Risk Management: The design and construction process encompasses various risks, including potential contractor insolvencies and the installation of costly equipment, often concurrent with ongoing construction activities.
Insurance Complexity: The intricate nature of these projects typically necessitates the integration of multiple, complex insurance policies to adequately cover the various risks involved.
Securing The Future Success of Data Centres
As the data centre industry grows, attracting top-tier talent is critical to success. Avery Fairbank specialise in executive recruitment for data centres, connecting top talent with leading organisations in the industry. Rely on us to find the appropriate candidate who meets your team’s specific needs, cementing your status as a leader in this evolving area. Visit our services page for more information on our executive search services. Please contact us if you have any questions concerning your specific requirements.
Published on 30-11-2023