Written by Karsten Winther, EMEA President, Vertiv
Unprecedented customer demand for cloud services, high-quality streaming, social media, and other digital services has set off a record-setting construction boom for all the major hyperscalers. According to Structure Research, the total global hyperscale self-build capacity will reach 13,117 megawatts (MW) in 2022 and an additional 13,652 MW is expected to be added over the next five to 10 years. During this time, the traditional makeup of the average data center is changing. Many new builds focus on efficiency, act as the hub of hybrid networks, and increasingly lean on prefabricated modular solutions and design.
Prefabricated modular data center solutions are built and integrated under tightly controlled factory conditions by trained specialists, which helps shorten construction timelines when time and labor are at a premium. These solutions also help reduce certain project costs and improve the total cost of ownership (TCO) by shortening the time it takes to start generating revenue. Depending on the architecture of the data center, prefabricated modular designs can greatly reduce the physical footprint of the systems they replace.
Standardization versus localization: a subtle, yet important difference
Major hyperscalers often use standardized prefabricated data center designs that allow organizations to design and engineer on the front end and repeat the build wherever they are in the world. This method may be more accepted in areas such as the United States or certain parts of EMEA, where there’s greater cohesion across various industry practices and regulations. However, there are opportunities everywhere, and global organizations need to consider the requirements of each region before deploying a standardized solution.
The alternative to this approach is what’s called “localization,” a crucial distinction where a standardized design is slightly modified and customized to comply with local requirements. Once a solution has been localized for a specific region, it can help mitigate some of the difficulties found in traditional installations by simplifying compliance with building codes, standards, and regulations.
Examining the global reach of prefabricated modular data centers
In Europe, the Middle East and Africa (EMEA), the major hyperscalers (Amazon Web Services, Google, Meta, and Microsoft) are the biggest market drivers in terms of adopting prefabricated modular data center solutions. Hyperscalers are built in remote areas, and these wide-open spaces make it easier to deploy some of the larger, standardized modules. In Europe, there has been growing public concern regarding data center resource consumption.
To help alleviate some of these issues, hyperscalers in parts of this region have used customized elements of prefabricated modules to reclaim heat in the data center and provide district heating for local populations. While sustainability will continue to be a pressing topic in the region, the nature of shipping these large blocks by the sea makes true sustainability a balancing act. The more equipment providers can incorporate sustainable materials and manufacturing methods in prefab solutions, the easier it will be to balance these elements.
Africa has experienced massive data center capacity growth in recent years, with expectations the region will expand to 675 MW by 2026, according to Xalam Analytics. The adoption of prefabricated solutions will continue to grow as African nations continue to pass various data privacy laws. Today, most of the major players in the region prefer a hybrid model or a “warehouse concept,” where modular solutions are in a fixed structure that can be expanded easily. As the market grows in Africa, businesses in the region will need to familiarize themselves with the nuances of each country to ensure they’re bringing in the right solutions, localizing that solution appropriately, and adding capacity without disrupting existing infrastructure.
Prefabricated modular data center solutions appeal to the major hyperscalers and colocation providers in North America because their speed and ease of deployment help stabilise construction schedules at a time when organizations are trying to meet unprecedented capacity demand. According to CBRE’s 2022 North American Data Center Trends Report, organizations from the seven primary U.S. data center markets added a record 686.8 MW of net absorption of data center space. In this region, hyperscalers and colo providers have the advantage of proximity, and the major third-party integrators have a local presence with easy access to equipment providers. This benefit allows these integrators to deliver these solutions to various parts of the region within days.
Latin America (LATAM) is establishing itself as an emerging market for prefabricated modular data center solutions. This is largely credited to major developments such as Google purchasing 30 hectares of land for a data center in Uruguay in 2021 and Scala Data Centers launching the largest vertical data center in the region last year. In this region, the costs and risks associated with new stick-build data centers and changing regional markets have made the scalability of prefabricated modular solutions more appealing. While organizations moving into LATAM want to standardize as much as possible, they must understand the various codes and jurisdictions and correctly localize these solutions for successful deployment.
Colocation is the most important data center sector in the Asia-Pacific region, largely because hyperscalers often lack access to in-country staff to build data centers there. Instead, they leverage established colocation data centers with a local presence, expertise, and cable connectivity to meet demand. Even so, the region still faces the challenge of having enough data center builders in each country to keep up with demand. While this lack of skilled labor on site would make a strong case for organizations to look into adopting more standardized solutions, there are several reasons why prefabricated modular data centers in the Asia-Pacific region are still in relative infancy compared to the rest of the world.
For example, much of the local expertise lies in traditional brick-and-mortar data center builds, and many data center builders in the region prefer the look and feel of traditional data centers, rather than the container-like appearance of a prefabricated modular data center. Additionally, supply chain woes persist in the region. The current lead times to ship these prefabricated solutions can minimize the speed-to-deployment benefits prefabricated solutions typically provide.
Preparing for a Prefabricated Future
An Omdia global survey of 228 companies that operate their own data center found that 52 percent already use prefabricated modular data center technology, and a whopping 99 percent said this technology would be a part of their future data center strategy. While these regions differ in how these solutions are adopted, the evidence is clear: for hyperscalers, traditional data centers are fading into the background as prefabricated, modular buildings and components become the norm.