Copyright © 2022 StrategyHelix Inc. All Rights Reserved.
Europe Data Center Colocation Market - Outlook and Forecast 2022-2027
The Europe data center colocation market is projected to reach USD 11.75 billion by 2027, growing at a CAGR of 6.19% from 2021 to 2027. This growth can be attributed to the increasing adoption of cloud services by small and medium-sized enterprises (SMEs) in Europe. These enterprises are showing a strong interest in digitally transforming their businesses through solutions such as IoT, big data, and artificial intelligence. As a result, there is a growing demand for data center colocation services, attracting significant investments in the market.
Retail colocation services are particularly in high demand in developing countries, as organizations with limited budgets and a need for geographical distribution capabilities seek these services. In 2021, Western European countries like the U.K., Germany, Ireland, France, and the Netherlands emerged as the leading markets for colocation investments in Europe, contributing over 75% of the market share.
|No. of Pages||
USD 8.2 billion in 2020
Colocation Service, Infrastructure, Electrical Infrastructure, Mechanical Infrastructure, Cooling Systems, General Construction, Tier Standards, and Region
|No. of Companies Mentioned||
The government’s focus on promoting data center investments through land development, renewable energy procurement, and reduced electricity tariffs will further drive the growth of the Europe data center colocation market. Additionally, mergers & acquisitions and joint ventures are expected to bring new colocation data center operators into the region, resulting in significant investments. Key players in the market include Equinix, Digital Realty, Global Switch, CyrusOne, Scaleway Datacenter, Beyong.pl, Green Mountain, DigiPlex, Colt Data Centre Services, Aruba, and Rostelecom, who are investing heavily in facility development.
Europe is witnessing rapid technological development and innovation, with artificial intelligence playing a crucial role in driving data generation and the technology market. The government is actively supporting the growth and development of artificial intelligence, and large-scale companies such as Siemens, Bosch, Rolls-Royce, and Airbus are spearheading innovation. Start-ups like DeepMind and FeatureSpace are also contributing to technological advancements.
Efficient heat reduction is a critical challenge in data centers to ensure uninterrupted system operation. Liquid-immersion systems and direct-to-chip cooling markets are strengthening their positions through original equipment manufacturer (OEM) partnerships. Many companies have established research and development centers for AI and other innovative applications in various European countries. For example, Samsung, Google, Oracle, and Huawei have set up AI-based R&D centers.
Data centers are significant contributors to global carbon emissions, and operators are actively seeking sustainable initiatives to reduce CO2 emissions. The European climate act aims to make the continent carbon neutral by 2050, with a target of supplying 75% of the facilities’ power from carbon-free renewable energy sources by 2025, and 100% by 2030. Operators like Interxion (Digital Realty), Equinix, Scaleway Datacenter, OVHcloud, Aruba, and others are committed to this act.
In 2021, Colt Data Centre Services announced that their data centers are entirely powered by renewable energy sources. Building carbon-neutral centers, known as green data centers, is a growing trend that will contribute to the Europe data center colocation market. For instance, Maincubes announced the development of a green data center in Frankfurt, Germany, using free-cooling systems. European governments are also making substantial efforts to address sustainability issues. The U.K. government, for example, has announced a law to reduce CO2 emissions by approximately 78% by 2035.
Several major investments have been announced in the Europe data center colocation market. CyrusOne plans to build a data center in Frankfurt, Germany, with a power capacity of around 90MW, while CloudHQ is developing a facility in Paris with a power capacity of approximately 140MW. These investments will create revenue opportunities for data center colocation and infrastructure providers worth billions of dollars.
Tax incentives and breaks offered by states and countries across Europe are significant drivers for facility construction, leading to substantial cost savings and other benefits. These incentives are available in various countries, with a focus on attracting data center investments, particularly in less developed countries.
Notable initiatives in the Europe data center colocation market include France reducing taxes on electricity for data centers to attract further investments, Switzerland adapting to the GDPR through the Federal Act on Data Protection (FADP) to attract investments, Norway adopting the four freedoms to encourage investments and trading, and Finland providing electricity tax exemptions for operators contributing to the district heating network.
The market is segmented based on various factors, including colocation service, infrastructure, electrical infrastructure, mechanical infrastructure, cooling systems, general construction, tier standards, and region.
Segmentation by Colocation Service
Segmentation by Infrastructure
Segmentation by Electrical Infrastructure
Transfer Switches & Switchgear
Power Distribution Units
Other Electrical Infrastructure
Segmentation by Mechanical Infrastructure
Other Mechanical Infrastructure
Segmentation by Cooling Systems
CRAC & CRAH Units
Cooling Towers, Condensers & Dry Coolers
Economizers & Evaporative Coolers
Other Cooling Units
Segmentation by General Construction
Core & Shell Development
Installation & Commissioning Services
Engineering & Building Design
Fire Detection & Suppression
Segmentation by Tier Standard
Segmentation by Region
Western Europe – Germany, UK, France, Ireland, Switzerland, Italy, Netherlands, Spain, Belgium, Portugal, Other Western European Countries
Nordics – Norway, Finland & Iceland, Sweden, Denmark
Central & Eastern Europe – Russia, Poland, Austria, Czech Republic, Other Central & Eastern European Countries
Retail colocation services are comparable to managed hosting services provided by cloud-based service providers. In retail colocation, enterprises own the IT infrastructure installed in their racks, which is operated by either the enterprises themselves or colocation providers through managed services. Retail colocation tends to have higher costs for power capacity (kW) and allocated bandwidth. This type of service is particularly suitable for enterprises that require less computing power at a single site or across multiple locations to cater to global and local customers.
The electrical infrastructure in data centers includes UPS systems, generators, transfer switches, switchgear, PDUs, and other components such as lighting, protective installations, cables, circuit breakers, and TVSS systems. The performance of data center operations, especially the IT infrastructure and cooling systems, relies on the power infrastructure. Additionally, the performance and connectivity of a data center depend on its electrical design and installed infrastructure. In 2021, the value of the electrical infrastructure segment in the European data center colocation market was $3,022.7 million, and it is expected to reach $4,374.5 million by 2027, growing at a CAGR of 6.35%.
Data center construction can be categorized as greenfield or brownfield development. Greenfield development involves building an entire facility in an empty area, while brownfield development entails converting existing facilities, including abandoned buildings or industrial facilities, into data centers. Greenfield development may include traditional brick-and-mortar facilities or modular data centers, whereas brownfield development often involves rapid provisioning of data center space through modular infrastructure installation. In 2021, the core & shell development segment of the European data center colocation market was valued at $1,458.2 million, and it is projected to grow at a CAGR of 4.86% to reach $1,938.3 million by 2027.
Tier I data centers have a non-redundant infrastructure with an annual downtime of 28.8 hours and an availability of 99.671%. Tier II data centers have partial redundancy in power and cooling infrastructure, with around 22 hours of annual downtime and availability of 99.749%. The adoption of these Tier standards has decreased in recent years due to their low efficiency, low redundancy, negative impact on Power Usage Effectiveness (PUE) and Water Usage Effectiveness (WUE), as well as increased carbon footprint.
In the U.K., several colocation providers, such as Colt Data Centre Services, CyrusOne, Digital Realty, Echelon Data Centres, Equinix, Interxion (Digital Realty), and VIRTUS Data Centres, are expanding their presence. Colocation operators are leading investments in the country, and further growth is expected with numerous new project announcements.
Investments in submarine cable projects are being made in the European data center colocation market to enhance connectivity with other regions and countries. In Germany, some of the submarine cables connecting the country include Atlantic Crossing-1, C-Lion1, CANTAT-3, Elektra-GlobalConnect1, Fehmarn Balt, GlobalConnect-KPN, and Germany-Denmark3.
Denmark is a developed country in terms of 5G connectivity, with major cities such as Copenhagen, Zealand, Odense, and Aarhus having deployed 5G services. The country is also considered one of the mature markets in the Nordics, offering robust fiber connectivity according to the International Telecommunications Union (ITU).
Finland’s CSC has announced a partnership with three Singapore-based entities: the National Supercomputing Centre, Singapore Advanced Research & Education Network, and the Quantum Engineering Programme of the National University of Singapore. The collaboration aims to explore a high-bandwidth research fiber optic link between Finland and Singapore and implement quantum computing for data protection.
Italy is home to colocation service providers such as Equinix, ITnet, Telecom Italia Sparkle, Aruba, and others. The growth of digital infrastructure and artificial intelligence in Italy attracts cloud and colocation service providers to invest in the European data center colocation market.
Prominent vendors in the European data center colocation market include Aruba, atNorth, Colt Data Centre Services, CyrusOne, Digital Realty, Echelon Data Centres, Equinix, and Iron Mountain.
In the European data center colocation market, various mergers and acquisitions are taking place among vendors. For example, in November 2021, Global Infrastructure Partners and KKR entered into an agreement to acquire CyrusOne for approximately USD 15 billion.
There is a strong emphasis on reducing energy consumption and carbon emissions in data centers by implementing sustainability measures such as free cooling and district heating.
In March 2022, Orange and OVHcloud collaborated on a project called Distiller (recommenDer servIce for SusTaInabLe cLoud nativE software) to reduce the facility’s carbon footprint and environmental impact.
The high costs associated with acquiring modern security systems will contribute to the competitiveness of the European data center colocation market. Simultaneously, the adoption of Data Center Infrastructure Management (DCIM) and Building Management Systems (BMS) solutions will enhance competitiveness by reducing operational expenses (OPEX) within the facilities.
Key colocation investors profiled in this report include 3data, 3S Group, AQ Compute, Artnet, Aruba, AtlasEdge, atNorth, Bahnhof, Beyond.pl, China Mobile, Colt Data Centre Services, CyrusOne, DigiPlex (IPI Partners), Digital Realty, DATA4, Echelon Data Centres, EcoDataCenter, EdgeConneX, Equinix, Euclyde Data Centers, Global Switch, Iron Mountain, Green Mountain, IXcellerate, KDDI, Liberty Global, Magenta Telekom, MTS, Neterra, Netia, Nautilus Data Technologies, NDC-GARBE Data Centers Europe, NTT Global Data Centers, Orange Business Services, Proximity Data Centres, Pure Data Centres, Rostelecom Data Centers, Stadtwerke Feldkirch, T5 Data Centers, Telecom Italia Sparkle, Vantage Data Centers, Verne Global, VIRTUS Data Centres, VK Cloud Solutions, Yandex, Yondr.
Key Questions Answered
What is the size of the data center colocation market in Europe?
The data center colocation market in Europe was valued at USD 8.20 billion in 2021.
What is the growth rate of the data center colocation market in Europe?
The data center colocation market in Europe is experiencing a compound annual growth rate (CAGR) of 6.19% from 2022 to 2027.
What is the projected size of the data center colocation market in Europe by 2027?
The data center colocation market in Europe is expected to reach USD 11.75 billion by 2027. This growth is driven by the increasing adoption of cloud services among small and medium-sized enterprises (SMEs) and the heightened interest in digital transformation, which includes embracing solutions like the Internet of Things (IoT), big data, and artificial intelligence. These factors will attract more investments into the European data center market.
Which vendors are prominent in the data center colocation market in Europe?
Prominent vendors in the data center colocation market in Europe include Aruba, atNorth, Colt Data Centre Services, CyrusOne, Digital Realty, Echelon Data Centres, Equinix, Iron Mountain, and others.
What are the factors driving the growth of the data center colocation market in Europe?
The growth of the data center colocation market in Europe is primarily driven by several factors, including the increasing adoption of artificial intelligence, the growing adoption of district heating systems, the rise of sustainable initiatives, the adoption of innovative technologies, and the increasing demand for advanced IT infrastructure.