Data Center Power Market - Global Outlook & Forecast 2024-2029

MARKET INSIGHTS

The global data center power market was valued at USD 22.46 billion in 2023 and is expected to reach USD 41.30 billion by 2029, growing at a CAGR of 10.68% during the forecast period. The market is experiencing robust growth, fueled by the increasing demand for data storage and processing capabilities worldwide. In North America, the major players, including tech companies, real estate developers, and infrastructure firms, are investing heavily in building and upgrading data centers. Adopting cloud computing, edge computing, and ongoing digital transformation efforts drives this investment surge. Moreover, the proliferation of technologies, including 5G, IoT, and AI, further amplifies the need for robust data center infrastructure to support these innovations. The global data center power market presents diverse investment opportunities across regions, driven by evolving technological landscapes, digitalization trends, and the increasing demand for data-driven solutions.

KEY TRENDS & ENABLERS

1. The demand for high-performance computing (HPC), driven by artificial intelligence (AI) and other advanced technologies, is pushing data center rack densities to new heights. From 2018 to 2023, average server rack densities rose significantly. Demand for HPC drives rack densities up to 200 kW and beyond.
2. Renewable sources like wind and solar are increasingly powering data centers. For instance, Microsoft announced in 2023 its commitment to powering its data centers with renewable energy by 2025.
3. Lithium-ion batteries are gaining traction in data center UPS systems for sustainability and efficiency. Companies like Amazon Web Services (AWS) announced in 2023 their adoption of lithium-ion batteries to enhance UPS performance.
4. AI and ML are shaping industries, driving demand for computational resources in data centers. Technology companies' collaboration aims to accelerate AI adoption in industrial operations, fostering sustainability and intelligence.

SEGMENTATION INSIGHTS

1. The Uninterruptible Power Supply (UPS) market within the data center power market is undergoing significant evolution, with a pivotal role in ensuring uninterrupted power supply at various levels of infrastructure. UPS systems, deployed at centralized, row-level, and rack-level positions, are increasingly being tailored to support loads ranging from 750 kVA to 1,500 kVA, with smaller systems below 500 kVA making notable contributions. The selection of UPS systems is driven by specific IT and cooling load requirements, with a growing emphasis on backing up cooling infrastructure to maintain optimal temperatures. Innovations in UPS solutions include offering UPS as a service and combining smart UPS systems with monitoring services for enhanced efficiency and cost reduction.
2. Battery technologies are growing within UPS systems, integrating environment-friendly options such as nickel-zinc and lithium-ion batteries. These innovations aim to address environmental concerns while ensuring consistent performance. The intelligent controls within UPS systems enable predictive maintenance, enhancing reliability, while redundant capacity remains preferred, especially among medium and hyperscale data centers. Reducing operational expenses and maintenance costs drive the transition from traditional VRLA batteries to lithium-ion batteries.
3. In the generator market, diesel generators dominate, particularly in regions with power grid issues, although natural gas generators are gaining traction due to their environmental benefits. The data center power market is witnessing a trend toward renewable energy sources and innovations, including HVO biodiesel and eco-diesel generators, which align with sustainability objectives. Diesel Rotary Uninterruptible Power System (DRUPS) systems are gaining popularity for their combined UPS and generator functionalities, particularly in regions such as Latin America and Southeast Asia.
4. Switchgear solutions ensure safe and efficient power distribution within data center facilities. Automation in switchgear technology simplifies the complexity of data center infrastructure. Offerings such as low-emission switchgear solutions focus on sustainability. The Power Distribution Unit (PDU) market is experiencing significant growth in the data center power market, driven by data center expansion and hyperscale projects. Intelligent PDUs with monitoring capabilities are gaining traction, particularly in colocation facilities, where metering and monitoring are emphasized.
5. Overall, the segmental analysis reveals a dynamic landscape within the power generation and distribution solutions market for data centers. The industry's trajectory reflects a commitment to reliability, efficiency, and sustainability, with continuous innovations driving advancements in UPS systems, generators, switchgear, and PDUs. As data centers evolve to meet the growing demand for digital services, the focus on resilient and eco-friendly power infrastructure remains vital.

GEOGRAPHICAL ANALYSIS

1. Regarding data center power capacity, North America maintains its supremacy in the data center power market, exhibiting steady growth throughout the forecast period from 2020 to 2029. With a commendable CAGR of 9.24%, North America continues to expand its power capacity, reflecting its robust investment in data center infrastructure. Notably, the regions within North America, such as North Virginia, Texas, and California, stand out as key contributors to the data center power market growth owing to the increasing demand for data processing and storage capabilities.
2. While North America retains its leadership position, other regions demonstrate significant growth in the global data center power market. Latin America, for instance, showcases notable expansion with a CAGR of 9.14%, indicating a rising demand for data center power infrastructure in the region. Countries including Brazil, Mexico, and Chile emerge as key players in Latin America's burgeoning data center market, attracting investments and driving growth in power capacity.
3. Similarly, the Asia Pacific (APAC) region displays remarkable data center power capacity growth, with a commendable CAGR of 10.38%. Nations, including China, India, and Singapore, are in charge of the APAC data center power market, fueled by the rapid digitization of economies and the proliferation of cloud services across the region. Southeast Asian countries, such as Malaysia and Indonesia, contribute significantly to the region’s expanding power capacity, driven by increasing investments in data center infrastructure.
4. In summary, while North America maintains its dominance in the global data center power market, regions including Latin America and APAC are emerging as formidable contenders fueled by growing investments and technological advancements. As the demand for data processing and storage continues to surge worldwide, these regions present lucrative opportunities for stakeholders seeking to capitalize on the evolving landscape of the data center industry.

VENDOR LANDSCAPE

1. The global data center power market is witnessing intense competition among power infrastructure providers. The leading market players are ABB, Eaton, Caterpillar, Cummins, Legrand, Schneider Electric, Siemens, Rolls-Royce, and Vertiv.
2. Cummins and Caterpillar have a strong presence in the data center power market for generators. With increasing demand for sustainability, operators are considering substituting traditional diesel generators and UPS systems with natural gas and hydrogen fuel cell generators, lithium-ion batteries, and intelligent PDUs to improve the efficiency of their facilities.
3. The data center power market is becoming very competitive, with power solution providers innovating their products to offer maximum efficiency and reliability. The varied requirements of data center operators are prompting vendors to develop products that reduce OPEX by up to 50%.
4. Vendors who can cater to the changed requirements of operators have been able to grab a bigger market share. Leading vendors offering UPS systems and generators should consider adding fuel deployment expertise to their portfolio as a standalone solution or through partnerships with small-scale fuel cell suppliers.
5. In addition, the increasing deployment of OCP-based infrastructure design will shift market demand. Vendors such as Schneider Electric, Rittal, HPE, Delta Electronics, and Huawei provide infrastructure based on OCP design. This will aid in the growth of market revenues for these vendors as many organizations prefer solutions such as 48V DC UPS systems.
6. The rising deployment of fuel cells in data centers will negatively impact market revenue for several vendors as it may slowly phase out the requirement for backup power infrastructure such as UPS systems, generators, switchgear, and the electricity grid supply. However, the impact of fuel cells is likely to be slow over the next few years.
7. Power infrastructure providers are continuously innovating and improving backup sources. The emergence of nickel-zinc batteries and continuous innovations in improving the solutions' modularity will intensify competition in the data center power market. Partnerships with local service providers, resellers, and modular data center solution providers will enhance vendors' revenue share in developing countries.
8. Data center operators are now focused on operating data centers without carbon emissions; however, these operators are still procuring generators in a redundant configuration, complying with the precautionary regulations.
9. Overall, the data center power market will witness multiple innovations, and power infrastructure providers need to partner with leading data center operators and principal contractors to improve their revenue during the forecast period.