The German data center market is growing despite difficult location factors

The rapidly advancing digitization is driving the demand for data center capacities in Germany. There are currently a little more than 3,000 data centers in Germany, each with a connected load of more than 40 kW, as well as around 50,000 smaller installations, which also include server rooms and individual server cabinets.

This is the result of the study “Data centers in Germany 2021” by Bitkom. NTT Ltd.’s Global Data Centers business, which contributed to the study, cites the key findings:

• • More power in the same area: Between 2016 and 2021, the IT connection capacity of German data centers and smaller IT installations grew by 30 percent to almost 2,100 MW – and the trend is still rising. The IT area grew far less rapidly in the same period and will even stagnate in the next few years. The reason is the significantly higher power density of newly built or modernized data centers, which provide significantly more power than older buildings in the same area.

• • Colocation is trendy: 40 percent of the data center capacities in Germany are allocated to colocation. At least 10,000 companies rely on these services because they don’t want or can’t manage their own data center infrastructure. By 2025, the colocation share is expected to increase to 50 percent.

• • New data centers are mainly built for cloud services: The data center boom of the past few years was primarily driven by the increasing demand for cloud capacities. While these increased by 150 percent between 2016 and 2021, capacities in traditional data centers remained almost unchanged. As a result, the cloud share grew from 20 to 33 percent – a development that will continue in the coming years, so that cloud computing will become the dominant operating model by 2025. By then, smaller edge data centers will also gain significant market share.

• • Large data centers shape the market: The growth in IT connection capacity is primarily due to large data centers with more than 5 MW. There are now 90 of them in Germany, which together provide almost half of the total data center capacities. The output of the around 3,000 buildings with 40 kW to 5 MW is also increasing continuously, while the capacities of small IT installations are shrinking to 40 kW. This is mainly due to the fact that the operation of data centers is complex and requires many specialists – larger data centers can simply be operated more efficiently. However, with the growing demand for edge capacities, the connection capacity of small IT installations could also increase again in the future.

• • Constantly increasing energy efficiency: Data centers require around 3 percent of the electricity consumed in Germany. Both the data center infrastructure and the IT hardware have become more and more efficient in recent years, so that the number of installed workloads per kilowatt hour of electricity has quintupled since 2010. Overall, the energy requirements of data centers rose from 10.5 to 16 billion kWh per year between 2010 and 2020 – in the same period the number of workloads increased by a factor of eight. The rapidly growing demand for data center services will continue to increase the energy needs of the industry in the future, but the digital services provided from data centers contribute to emission savings elsewhere, as many business trips and commutes are eliminated, for example through video conferences and home office.

• • Location factors remain difficult: As a data center location, Germany scores above all with a reliable power supply, good connections to internet exchange points, as well as legal security and data protection. However, data center operators and experts rate the power supply from renewable sources and the availability of skilled workers as rather poor in an international comparison. In addition, experts see the continuing rise in electricity prices and the long, complex approval procedures as the greatest risks that could slow down the necessary expansion of data center capacities. The Federal Republic is therefore not one of the top locations for data centers in Europe and receives a below-average rating.

“The federal government wants to accelerate infrastructure projects such as the gigabit and data center expansion through simpler and faster approval processes – we welcome that. Germany needs a reliable and high-performance digital infrastructure in order to catch up with the digitization deficit in many areas of the economy and administration,” emphasizes Günter Eggers, Head of Public Sector at NTT Global Data Centers EMEA.

“In recent years, the construction of data centers in Germany has become more difficult due to the complex processes and the corona pandemic. That’s why we take politicians at their word, so that they don’t make development even more difficult and improve the framework conditions. This includes not only simpler approval procedures, but also the modernization of heating networks to enable extensive use of waste heat from data centers.”