Forecast and Five Predictions for 2023
As of 2023, several analysts summarized the challenges facing our industry. Now, at the end of the year, it's interesting to look back at these predictions and assess their accuracy. It's important to note that these predictions have an American influence, but they can still be insightful to examine.
Challenges Regarding Supply and Demand:
After several years of significant growth, the digital infrastructure sector faces obstacles in rapidly building new data centers. Power shortages in central markets, delivery issues, and local resistance can delay expansion timelines, potentially resulting in a shortage of data center space in the latter half of 2023.
Growth in Secondary Markets:
It was expected that the shortage would lead to faster development in secondary markets, such as the Nordic region. The expectation was increased growth of data centers, driven by power shortages in previous main markets. New massive projects in new areas with sufficient power and land were expected to offer opportunities for expansion.
Comment: This largely held true for the American market. Even in the traditionally dominant FLAPD (Frankfurt, London, Amsterdam, Paris, and Dublin) regions, growth slowed due to capacity constraints, as explained by CBRE. Expansions were announced extensively in Sweden, Norway, Denmark, and Iceland. In Finland, a large Microsoft project with Fortum was also announced.
Impact of Generative AI Tools:
Tools like ChatGPT, Dall-E, Lensa AI, and GitHub Copilot demonstrated the creative potential of AI. Advances in AI, especially in generative applications, were expected to drive investments and innovation and increase demand for specialized high-performance computing (HPC) platforms in data centers.
Comment: An increased pace in the procurement of data center capacity was observed in the fall. Requests for many megawatts also came to the Nordic market, often capacities exceeding what was available within the next two to three years.
PR Challenges for Data Centers:
Due to resource consumption, data centers risk being perceived as a hindrance to societal development, particularly driven by concerns about water and electricity consumption, posing challenges for expansion in key markets.
Comment: In Norway, there was debate over TikTok's establishment of a data center expected to have a capacity of 150 MW spread across five buildings of 30 MW each. Criticism focused on the risk of the data center hindering other electricity-dependent activities, potentially missing out on many job opportunities.
On-Site Power Production (Off-Grid):
Data center projects were expected to increasingly include on-site energy production to support expansion in power-constrained markets.
Comment: Several suppliers and data center builders announced projects where the future data center would be entirely powered by gas (LNG) or fuel cells. Examples include Gloriosa and Microsoft's plans for a gas-fired power plant in Ireland and the emergence of companies focusing on data centers supported by solar power.
These trends are expected to continue into 2024, highlighting the dynamics within the data center industry, where challenges are anticipated to have similar effects in the coming year. In our vie, it's more crucial than ever to ensure that data centers contribute to energy and heat supply, and IT is allowed to grow to facilitate essential societal functions. Sustainability within the environment will remain a key consideration, for a long time to come.