IT in Manufacturing

Data centre sector 2024 market outlook

April 2024 IT in Manufacturing

As the world adapts to the digital transformation of almost every aspect of everyday life, the data centre sector, which plays such a pivotal role in digitalisation, is constantly evolving. The rapid evolution of data centre markets, and shifts in the architecture and design of data centres, means that as we start a new year, the data centre industry is navigating a complex maze of challenges and opportunities that promise to realign its trajectory.

Jaco du Plooy, field product marketing manager at Eaton Africa, highlights the transformative journey of the data centre industry. Leveraging cutting-edge technologies, the industry aims to optimise operations, streamline resource allocation, and enhance security protocols. From improving sustainability and energy efficiency, while simultaneously managing rapid growth in demand, to complying with regulatory changes, it is fair to say that events in 2024 will be far from business as usual in the data centre sector.

Factors impacting growth

Several factors are impacting the growth of the data centre market. These include the continuous development of data-intensive industries, accelerated by the widespread continuous adoption of the cloud by organisations across the globe. Innovative new IoT and AI technologies are another significant factor.

AI and other digital solutions have an increasingly important role to play in data centre lifecycle management. Not only do such capabilities monitor the current state of the data centre, they also provide deep operational insights and perform predictive analysis, allowing data centre operators to manage performance and understand where their assets need to be. The emergence of technologies like AI, which are trained on vast quantities of data, has led to an enormous surge in computing demand, thereby posing a challenge despite their capabilities.

According to TIRIAS Research, the data demands of generative AI applications such as ChatGPT could result in a 50 times increase in the number of workloads processed worldwide by 2028. Such exponential growth in demand, along with ongoing advancements in technology, could see a change in customer requirements around data centre design and architecture. This may result in the need for new and different solutions. At the very least, data centre operators in South Africa will face an urgent need for more data centre space and increased density per rack as they maximise or expand their existing investments. Adaptability and agility will be key in addressing the evolving demands of AI-driven workloads in the South African data centre market.

To boost availability fast, prefabrication is already emerging as one of the answers to the challenge. A modular data centre such as Eaton’s xModular power system is a portable method of deploying data centre capacity that can be placed anywhere it is needed, so expect to see this trend accelerate in 2024. Modular data centres typically consist of standardised components that can be added, integrated or retrofitted into an existing data centre or combined into a system of modules.

Power constraints

In South Africa, like in many other countries, there are now restrictions on adding major new loads to the grid. Permission to build or expand is becoming more difficult to obtain, prompting questions over where data centre clusters are located. Until now, the conventional hubs for data centres have been major cities like Johannesburg, Cape Town, Pretoria, Durban and Port Elizabeth. This is due either to the presence of company headquarters, or the natural economic advantages stemming from robust telecom connectivity and ideal client demographics.

However, there is a shifting trend towards moving away from these traditional hubs and establishing data centres in smaller cities across Tier Two countries where power constraints may be less of a problem and relevant permits easier to obtain. The drawback of this, of course, is the potential lack of skilled workers. Nevertheless, expect to see this trend develop in 2024 as cities less well-known for data centre clusters such as Bloemfontein, Pietermaritzburg, East London, Polokwane and Nelspruit appear on the radar to avoid power constraints.

Sustainability challenge

With data centres being central to almost everything we do, public awareness of their presence and power requirements is inevitable, and with this comes environmental responsibility. Data centres are the backbone of the digital world and therefore impact how society reduces emissions to combat climate change. In 2024, achieving sustainability goals will continue to be vital, and the data centre industry will bear scrutiny from regulators such as the South African government and other international bodies to ensure it makes progress. Additionally, with South Africa being part of the global community, it will likely also face pressure from regulators such as the European Union (EU) and the US Security and Exchange Commission to align with the international sustainability standards and practices.

Balancing growth and sustainability will undoubtedly be challenging, but as the industry steers toward a more sustainable future, data centres will need to adopt innovative strategies to minimise their overall environmental footprint. This imperative aligns with a broader industry-wide commitment to a more holistic approach to system performance, which recognises the interplay between technological advancements and environmental impact. Energy efficiency will play a significant role. Achieving more with the same amount of energy or less will be a recurrent theme throughout the year ahead, and will continue into the foreseeable future.

There will be growing emphasis on addressing what are known as Scope 3 emissions under the Greenhouse Gas Protocol, the most common standard for carbon accounting. Currently, much of the market is focused on Scope 1 and 2 responsibilities, which include carbon usage effectiveness, power usage efficiency and water usage efficiency, amongst others. Scope 3, however, involves looking at a data centre from a total lifecycle perspective in terms of sustainability, shifting the emphasis from metrics to entire system performance. “Digital will be the key method for measuring and managing this performance, using software that takes account of aspects such as availability, scalability, flexibility, and commercial efficiency for the most thorough and detailed sustainability reporting,” says Du Plooy.

Significantly, this heightened awareness is propelling the sector towards adopting eco-friendly practices. Expect to see diesel generator replacements, battery energy storage systems, on-site generation, advanced cooling, and other technologies taking centre stage. Seeking out renewable energy sources to replace or bolster existing supplies, and exploring the options to introduce or increase onsite power generation from assets such as solar panels and wind turbines, will be part of this. So too will be a renewed emphasis on how data centres can work in tandem with the grid. We are likely to continue to hear more about the grid-interactive data centre in 2024, and data centre operators will doubtless want to find out more about this option, which brings with it the benefit of helping to decarbonise the grid, and also contributing to their own sustainability goals.

Regulatory pressure

Unsurprisingly, the data centre industry has attracted the attention of the regulatory bodies charged with delivering the United Nations goal of carbon neutrality by 2050. According to Africa Data Centres, South Africa will account for the bulk of the $5 billion investment expected to enter the Africa data centre market by 2026, with the country securing an estimated $3,1 billion in investments by that time. The South African data centre industry should anticipate stricter environmental standards from policymakers and regulators. It is imperative for companies in this sector to address sustainability concerns proactively rather than wait for regulatory enforcement. Taking pre-emptive action not only safeguards the industry’s reputation, but also has the potential for financial benefits. By reducing energy and water consumption, data centres can achieve long-term cost savings, outweighing the initial investment in sustainability measures. Therefore, embracing environmental responsibility now is not only prudent, but also economically advantageous for South African data centre operators.

A bright future

“Building a robust digital strategy may seem daunting, but in today’s landscape it is an absolute necessity for data centres to evolve in line with all the trends touched upon in this article. With increased demand for computing driving the need for speed and optimisation of operations, it is key to ensure that the data-rich environment is managed efficiently,” says Du Plooy.

Digital transformation is affecting every sphere of life, and the way we do business is changing. Digitalisation is good for the data centre industry, and AI can help the industry to become more predictive, rather than simply reactive. The future looks bright for the data centre sector in 2024. Certainly, it will be characterised by a dynamic interplay of technological advancements, sustainability imperatives, and a relentless pursuit of operational excellence. Data centres have the scope to grow responsibly and sustainably to become true hubs of digital innovation, a worthwhile new trajectory for the industry and for us all.

For more information contact Paulien van Heuveln, Eaton Africa, +27 68 303 5371, [email protected],

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