Data centres are power-guzzlers, using between 220 and 320 terawatt hours (TWh) of electricity worldwide in 2021, or 0.9% to 1.3% of global power demand, according to the International Energy Agency.
As a back-of-the-envelope estimate, if a standard one-gigawatt nuclear reactor produces around eight TWh per year, it takes up to 40 of them to power the cloud infrastructure that supports the world’s burgeoning digital economy. Access to power is therefore the top priority of data centre service providers.
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“Access to power, particularly green power, is the main thing we would look for,” confirms Christina Mertens, vice president for business development of UK-based digital infrastructure provider Virtus Data Centres. “Any land plot without access to power is worth nothing for a data centre provider like us. On the other hand, any geography providing access to power will do, even when it doesn’t offer a plot of land right away. We can find the land eventually, but if the power infrastructure is not there, that’s more difficult to get.”
Access to power, particularly green power, is the main thing we would look for.
Launched in 2008, Virtus has quickly scaled up its presence in and around London to become a major provider of colocation services (whereby the data centre infrastructure is rented out to customers). Catering to local clients of all sizes, from hyperscalers to start-ups, it currently runs 11 data centres with a combined capacity of about 180 megawatts (MW) in four locations. The company now plans to extend its reach beyond the UK, following Macquarie Asset Management’s acquisition of a 40% stake in August 2022.
“While London’s data centre market is expected to continue seeing increased absorption levels, driven by strong demand for hyperscalers, we believe Europe — including core markets such as Germany and France — will present sizable growth opportunities over the next decade,” said Nathan Luckey, senior managing director in Macquarie Asset Management’s real assets team, when the deal went public.
Closing the infrastructure gap
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While the Covid-19 pandemic accelerated the digitisation of the global economy, it also highlighted the infrastructure shortcomings that are still slowing the mass deployment of digital technologies and services. In a world where digital prowess determines the competitiveness of economies, addressing any infrastructure gap is both an imperative for governments and a major opportunity for companies such as Virtus.
“The Covid-19 pandemic has opened the eyes of many in Europe. Countries like the UK already have very modern digital infrastructure,” says Ms Mertens. “Others, like Germany, are dinosaurs with regards to digitisation, to the point that people were struggling to shift to a digital workspace during the pandemic. That has prompted many countries around Europe to prioritise digitisation.”
Virtus is developing a 100MW pipeline of projects in prime locations across the UK and Europe but is being highly selective about the type of power it will use. Since its clients’ net-zero commitments dictate that their digital infrastructure is consistent with their long-term environmental strategies, access to green power sources is crucial to Virtus’s commercial success.
“We want to give our customers an excellent operation they can scale, but also a green solution. Clients have net-zero targets and will only contract Virtus or any other provider if they also follow that goal,” says Ms Mertens, adding the company is also committed to upholding the highest standards of water and waste heat efficiency. To that end, it has contracted green energy providers on the market and is also exploring self-generation solutions.
However, the 100% uptime imperative often written into its contracts can present a challenge when testing out self-generation solutions based on intermittent renewable energy sources such as wind or solar. It seems not all data centre infrastructure is created equal, and so the long-term success of companies such as Virtus will inevitably hinge on their sustainability profile — and whether it aligns with that of its clients.
This article first appeared in the April/May 2023 print edition of fDi Intelligence.