Eaton shares the outlook for data centers in 2022

Ashraf Yehia, Managing director, Eaton Middle East talks about the increased dependency on data and data centres leading to the higher demand for energy and what kind of challenges and opportunities does it offers to the industry 

Ashraf Yehia, Managing Director, Eaton Middle East

No return to normal 
For data and the data centre industry, the pandemic disruption was also a major catalyst for accelerated digitalisation. Thankfully, most of the technology needed during the crisis was already in existence, supported by data centre and telecoms infrastructure.

In addition to that, according to a PWC survey, 67% of Middle East consumers think they have become more digital in comparison to the global 51%, with the highest percentage being in Egypt at 72%. This can be related to the fact that governments are moving towards smart cities.

The before-mentioned crisis drove the rapid adoption of these technologies and sped developments which were already underway. But what is most significant is that this change is likely to be irreversible. When you remove a catalyst, the reactions it caused do not reverse themselves. The increased reliance on data centres (and by extension the telecoms infrastructure which connects us to them) is here to stay.

However, there are serious associated issues with this. A decades-long efficiency drive, which held data centres to steady demand levels while processing much more, has run out of headroom. Our economy and society have gone full throttle on data, exactly at the time when we need to put the brakes on energy consumption if we’re to combat climate change. There are no megabits without megawatts, and as we demand and produce more and more data, energy consumption levels will rise.

The data centre in a world of power transformation
How, then, can the industry achieve seemingly contrasting objectives and ramp up while ramping down?

Squaring this circle will be the dominant feature of the energy and data centre industry for the next five years. As if this conundrum was not enough, now throw in the fact that electrification is sweeping other industrial sectors, transportation, and domestic and commercial heating/cooling. As the demand for electrical energy is set to soar, data centre operators will face tough challenges in accessing scarce, new energy production.

The solution is to ramp up renewable energy production, not only to meet new demand, but to also displace current fossil-based production. So, it is not just the data centre industry facing challenges. Energy network operators themselves will be stretched as they are asked to perform the magic trick of increasing supply while simultaneously decommissioning fossil fuel plants.

This may apply further pressure on commercial end-users. And governments setting the rules and direction for energy markets will be asked to make complex and highly consequential decisions about how energy is produced, managed and who is prioritised for power consumption. Data centres are crucial for ensuring data security. Moreover, emerging digital hubs including Bahrain and Dubai were awarded for data centre facilities.

Limited capacity means acute oversight
Players in the data centre sector – from big tech to service providers and real estate owners – have grown used to getting power whenever they need it. But as the plates spin across many sources of demand, data’s role will be scrutinised in detail. The sector can make the case that its activities offset existing demand elsewhere but cannot excuse itself from the consequences of creating greater demand in the main.

As such the challenge for data centres will no longer be one of efficiency, but one of sustainability. New metrics, new approaches to data centre design and operations will fall under greater scrutiny, as will the energy consumed by the overall telecom infrastructure which has an energy requirement many times that of the data centre industry.

We rely on data, data relies on power, and a significant gap between our wants and needs will soon emerge. On one side this appears as a crisis. However, on the other side, this will be the kind of gap that will attract serious investment and innovation. For the grid, this gap will enable new and existing private ventures to build out the renewable power we desperately need.

The market opportunity for alignment of data and power
A seller’s market for power supply opens the door to new approaches and new models. For data centres, it will solidify the economic case for a new relationship with power, not just as consumers but as sites which support the grid with energy services, storage and even power generation.

Data and power will realign and soon in some cases that alignment will become a physical proximity, too. With economics and policy beginning to align in this manner, there is a case for data centres to offer not just frequency response, but also move into direct flexible supply to the grid. Sector coupling, then, could become one of 2022’s major headlines for the data centre sector.

Here in late 2021, we’re seeing the first glimmers of what this might look like; by the end of 2022 and beyond the dots between data and power will truly have been redrawn and hopefully look joined up, and we will continue to see the growth of ventures structured to make data centres part of the solution to the renewable transition.

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