The evolving knowledge centre building market

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6h | Antony Savvas

Building restrictions, energy restrictions, material costs, and changing technologies are all issues and potential obstacles to a successful implementation of data center construction projects. Antony Savvas examines how the industry deals with it

There are and have been building restrictions for data centers in the Netherlands, Singapore and parts of China, for example for reasons of environmental planning and / or for reasons of power availability. There are also proposals to limit the construction of data centers in Frankfurt, Germany, for planning and power reasons, as well as for power reasons in Ireland.

There has also been a sharp spike in US steel prices recently, which will impact data center construction costs in this market and elsewhere. And construction and labor costs continue to rise around the world.

In addition, the European Union has just set lower carbon targets for companies that are expected to have an impact on the data center construction industry.

So how do companies mitigate these circumstances in relation to their expansion plans – and can they?

materials
Rebecca Best, director of cost management and high-tech manufacturing at construction project consultancy Turner & Townsend, said: “The global pandemic has impacted both supply and demand in the construction sector as a whole. At the beginning of the Covid-19 crisis, we saw a decline in data center construction, which was accompanied by a decline in material production.

“However, the sector was viewed as critical and while construction activity has increased significantly as a result, material production has lagged. This pent-up demand has led to price increases. “

In the case of steel, copper, aluminum, wood and cement, there have been sharp increases in the price of materials. Global steel prices have more than doubled in Europe and the US in the past 12 months, she adds, and copper prices were around $ 10,000 per ton at the beginning of this year (May 2021 on the London Metal Exchange) compared to $ 5,500 the year before.

In addition to price increases, Best says long lead times are affecting data center programs, especially the delivery of equipment such as generators.

Roy Gibbens, Executive Director of Sales and Marketing at Ark Data Centers, said of the overall delivery problem, “We work closely with our supply chain – in some cases we booked certain components years in advance on the manufacturing schedules to ensure that Products are available when we need them. “

sustainability
While there isn’t much to do about commodity prices in an open market, Best believes the data center industry can do its part for sustainability.

She says, “The need for more Internet data storage as a result of more web-related activities and home work has raised awareness and the drive to decarbonise data centers.

“In response to the environmental agenda, the sector continues to invest in new technologies such as liquid submersible cooling and test projects for underwater data centers to reduce cooling costs and hydrogen fuel cells / flow batteries to run backup generators instead of diesel. ”

This is on top of the generally ongoing trend in the industry towards green power, where power is obtained from PVs, wind farms and tidal power rather than relying on fossil fuels.

Many important data center companies – together with business associations – based in the European Union have also joined the EU-supported climate-neutral data center pact, which pledges to be climate-neutral by 2030.

Specific measures such as PUE (lower power use effectiveness) targets are included in the pact, with an annual target of 1.3 for new data centers operating at full capacity in cool climates by early 2025.

Planning constraints
But while it is clear to many that efforts are being made in the face of climate concerns, the data center industry is grappling with strict planning restrictions and rules in an increasing number of areas.

Alex Reid, co-founder of Reid Brewin Architects, says: “What we are seeing on the European mainland is a tightening of the environmental requirements and rules around the sites – especially with regard to the reuse of waste heat, the minimum water consumption for cooling and rules for Greenfield sites in general. That puts enormous pressure on the feasibility studies of such constructions. “

Regarding perceived and potential power shortages in some markets, Reid says some data center companies step in quickly before opportunities dry up.

He says: “Electricity shortages have increased the value of land in areas with guaranteed supply. This is why data center providers are pushing to buy multiple locations to ensure future supply – a “land grab,” if you will.

“In France, for example, we see companies paying fees as soon as possible to reserve the power supplies.”

Ark’s Gibbens confirms what Reid says he has to be quick to secure power. He says, “Power shortages are a real problem. At some locations, the electricity has to be reserved before the purchase of a plot of land in order to avoid a delay of several years in the electricity supply during the construction of the plant. “

Skills
Regarding the availability of construction specialists and whether the position is deteriorating, Gibbens says: “There are bottlenecks from project management and construction specialists to electrical and mechanical engineers. It can be difficult to find the workforce you need, and to keep projects on track, some skills are held in reserve so that they are available when needed. “

Ark Data Centers is addressing this problem through a collaboration with the University Technical College UTC Heathrow in London. Gibbens says, “We’re influencing courses to make sure they’re better geared towards the data center industry. We will offer internships for students during their studies while ensuring that their skills are relevant and applicable when they graduate. “

Brandon Oliveri-O’Connor, sales director for EMEA construction management software company Procore, says that once projects bring together the skills and materials they need, more care needs to be taken to ensure they are used efficiently.

He says: “Building data centers is more complex than ever. From cooling systems to energy usage and safety, construction is highly specialized work. In addition, global supply chain disruptions are currently making costs and product delivery more difficult.

“It is critical for both operators and contractors to have transparency about their supply chain and financial performance – to ensure that both are available in real time and that the data going into the system is reliable.”

Traditionally, operators and contractors had to compare data from different systems, which made it difficult to get a unified view of material supply, capabilities and project progress. Therefore, more investment may be required here to make projects successful.

New markets
With all of this mounting pressure on construction, Data Economy is wondering whether major European data center markets Frankfurt, London, Amsterdam, Paris and Dublin (FLAP-D) are now facing serious competition from other parts of Europe – are construction factors related to power availability and more stringent Planning requirements come into play in these oversubscribed areas?

Will King, managing director of data center research company DC Byte, said, “The major data center markets in Europe remain the largest and continue to grow rapidly. For example, Dublin, the largest hyperscale do-it-yourself store in Europe, currently has 277 MW under construction.

“Although we are seeing that growth is now accelerating in newer markets as well – for example Milan (36 MW under construction), Warsaw (24 MW), Madrid (63 MW) and Zurich (48 MW), to name a few – if we have MW under construction in these four regions, it’s only 171 MW.

“Although we can record growth in other markets, the core markets with almost one gigawatt (810MW) under construction remain the biggest growth drivers for new offerings.

“Overall, however, it’s too early to say whether stricter planning legislation will have a bigger impact in the longer term,” says King.

Top performer
With all the current and potential problems, the bottom line is that data center construction, measured in terms of activity, can now be regarded as the most powerful sector internationally.

Turner & Townsend’s recently published International Construction Market Survey 2021 reports that data center construction is now the number one construction activity this year, down from eighth place in 2020.

The construction of data centers now outperforms traffic (road, rail and ports) – the number one last year – and the segments of industry, manufacturing and sales; Residential and social housing; Corporate users (office equipment); Education (schools and universities) and large mixed-use projects, along with 10 other large segments.

Some may argue that a number of these other segments deserve to be ahead of the data center to meet major social needs. What cannot be said, however, is that data center companies are delaying their plans to meet the demand for more data storage and management through a pandemic due to the wider adoption of cloud services and increased remote working.