Europe Data Center Cooling Market Landscape 2024-2029

INDUSTRY OVERVIEW

The Europe data center cooling market by investment was valued at USD 2.10 billion in 2023 and is expected to reach USD 3.41 billion by 2029, growing at a CAGR of 8.40% during the forecast period. The growth of IoT, cloud computing, and AI & ML is propelling the data center market in Europe. Government-led initiatives aimed at the digitalization of countries have increased operators' investment in the region, thereby supporting the market growth in the region. Furthermore, Google, AWS, and Microsoft are some cloud service providers with a presence in the region, with other providers such as IBM, Alibaba, Deutsche Telekom, Oracle, Exoscale, and others. Also, AI expansion drives significant transformation across various sectors, enhancing convenience and functionality in finance, healthcare, and beyond. In data centers with AI & ML workloads, liquid-based cooling is favored for its effectiveness in managing the substantial heat produced by powerful computing devices such as TPUs.

KEY TRENDS

5G Deployment Fuels Data Center Investments

1. The increasing use of smart devices is sustaining the growth of 5G and edge computing, the demand for quicker processing, and the force on networks. When paired with edge computing, 5G leads to the possibilities of better digital experience, fast performance, strong data security, and uninterrupted operations across all industries. In 5G networks, edge data centers are vital for reducing the delay in accessing data and speeding up data processing initiatives.
2. In October 2023, The Office of Electronic Communications (UKE) in Poland completed its auction of Spectrum in the 3.5 GHz Band. The spectrum auction, originally slated for 2020, was delayed due to the COVID-19 pandemic. It raised over USD 470 million for the Polish budget. Four major telecom operators are winning the auction: Polkomtel, P4, Orange Poland, and T-Mobile. Each operator will receive one block of 100 MHz spectrum.

Rising Adoption of AI Will Drive Demand for Advanced Cooling Technologie

1. The Europe data center cooling market is experiencing significant growth due to the adoption of advanced technologies such as AI and ML. Worldwide, people are increasingly embracing AI for various operations.
2. The demand for advanced cooling technologies will surge significantly in the next two or three years. Many data centers are transitioning from traditional cooling methods to new technologies to accommodate the increased cooling needs driven by AI advancements.

Growing Rack Power Density

1. Rack power density is a critical factor in data center design, capacity planning, cooling, and power provisioning. An unprecedented rise in IT equipment rack power density has occurred over the past few years. The adoption of compute-intensive workloads such as AI, IoT, Augmented and Virtual Reality, and the popular cryptocurrency mining trend have increased data storage and processing requirements, necessitating high-density racks.
2. The shift toward more powerful racks is witnessed across most data center facilities. For instance, 3 MW IT load facilities will likely support a power density between 5 kW and 10 kW, while those over 5 MW may support even higher rack power densities. Accordingly, 30 MW facilities will likely support a rack power density between 10 and 20 kW. Newly built data centers are optimized with new and advanced technologies that support the cooling infrastructure, increase the efficiency of data centers, and enable the installation of high-density racks.
3. In August 2023, CyrusOne introduced a new data center design specifically built for AI applications. This design incorporates liquid-based cooling and other advanced techniques to achieve high power densities, enabling customers to use liquid-to-chip cooling technology and immersion cooling techniques to achieve efficient cooling of up to 300 kW per rack.

Innovations in Data Center Cooling Techniques

1. As advancements in technologies such as Artificial Intelligence (AI), the Internet of Things (IoT), and Machine Learning (ML) drive higher computing power requirements and performance expectations, the power demand will rise. Increased power usage will increase data center infrastructure and IT equipment temperatures.
2. Liquid-based cooling techniques are significantly growing in the Europe data center cooling industry, particularly in direct liquid and immersion cooling solutions. In contrast, the adoption of chilled water systems is expected to decline in the coming years, driven by the increasing demand for cooling solutions that minimize water usage. Data center operators increasingly install on-site water tanks, treatment plants, and recycling systems to address water consumption concerns.

Adoption of Liquid-Cooling Techniques

1. In August 2023, Digital Reality announced the launch of its high-density rack, which supports up to 70 kW per rack at several data center locations across EMEA. The company said this is possible due to the latest cooling technologies, including air-assisted liquid cooling (AALC).
2. Initially, Liquid Immersion cooling was considered a niche technology in the early days of data center cooling. Today, however, it is being actively tested and adopted by various data center operators and IT companies to enhance operational reliability, achieve cost savings, and manage the high power densities prevalent in modern data centers.

SEGMENTATION INSIGHTS

1. The European region has a warm climate, and data centers that operate in warm climates adopt free-cooling chillers with smart technologies because they enable operations based on outside temperatures.
2. The Europe data center cooling market is experiencing a trend toward free cooling techniques. The demand for chiller systems remains significant in specific locations and for data centers with unique cooling requirements. The industry's focus on energy efficiency and sustainable cooling solutions continues to shape the market landscape.
3. The adoption of chiller units is expected to be higher in Western Europe and the Nordics. Many data centers are considering adopting free cooling chillers in the abovementioned regions.
4. A few major adopters of direct-liquid cooling solutions and liquid immersion solutions located in Central & Eastern European countries are data centers with supercomputing facilities and rack power density of over 100 kW.
5. The Europe data center cooling market is witnessing ongoing innovations in the free cooling space, including the development of free cooling chillers that operate without water and indoor CRAC units that optimize cooling efficiency.
6. The growth of liquid-based cooling techniques is higher among direct liquid-based cooling and immersion cooling solutions; the adoption of chilled water systems will likely decline over the next few years due to the growing need for cooling solutions that do not require water to reduce water consumption in data centers.

GEOGRAPHICAL ANALYSIS

1. The growth of IoT, cloud computing, and AI/ML is propelling the data center market in Europe. Government-led initiatives are aimed at digitalization in different sectors in European countries. Local and global operators have shown interest in investing in data centers in European countries. For instance, In July 2023, CyrusOne planned its sixth German data center, FRA6, in Frankfurt following the Europark site acquisition. It will strategically provide 72 MW IT capacity across four floors, emphasizing sustainability and meeting Frankfurt's digital demands.
2. In 2023, Germany dominated the Europe data center cooling market in terms of investment, followed by Ireland, the UK, France, Norway, Denmark, Spain, Switzerland, the Netherlands, Belgium, Finland, Iceland, Russia, Poland, and other European countries.
3. In Western Europe, Germany was the largest data center cooling market by cooling systems in terms of investment, with a share of around 20% in 2023, followed by Ireland with a share of around 20%, the UK with a share of around 15%, and France with a share of around 15%.
4. In the Nordics, Norway was the largest data center cooling industry by cooling systems in terms of investment, with a share of around 33% in 2023, followed by Denmark with around 28%.
5. In Central & Eastern Europe, Russia was the largest data center cooling industry by cooling systems in terms of investment, with a share of around 35% in 2023, followed by Poland.

VENDOR LANDSCAPE

1. The Europe data center cooling market hosts various active vendors offering different types of solutions. Vendors that provide innovative and advanced technologies stand a better chance of securing a larger share throughout the forecast period.
2. Some of the prominent cooling infrastructure providers operating in the Europe data center cooling industry include 4energy, 3M, Airedale, Alfa Laval, Black Box, Carrier, Condair, Daikin Applied, Delta Electronics, Eaton, EcoCooling, Green Revolution Cooling, Johnson Controls, Mitsubishi Electric, STULZ, Schneider Electric, Rittal, Vertiv and others.
3. Ongoing advancements in cooling technologies, including direct-to-chip and liquid immersion, are crucial for addressing the data center industry's needs. Many colocation and hyperscale operators are now implementing these liquid cooling solutions, which help reduce energy consumption and lower electricity costs.