U.S. Green Data Center Market - Industry Outlook & Forecast 2023-2028

PREMIUM INSIGHTS

The U.S. green data center market was valued at USD 13.79 billion in 2022 and is expected to reach USD 24.20 billion by 2028, growing at a CAGR of 9.82% during the forecast period. After the U.S. rejoined the Paris Agreement and companies and signed various agreements like the iMasons Climate Accord etc., The government and companies are all proactive in deploying technologies and taking the latest initiative in moving towards sustainability. Hyperscale operators such as AWS, Facebook (Meta), Microsoft, Apple, and Google are leading in terms of new innovations in sustainability in the data center industry. Most U.S. green data center market players, especially colocation operators like Equinix, Digital Realty, CyrusOne, Aligned, STACK Infrastructure, Iron Mountain, QTS Realty Trust, Vantage Data Centers, Switch, and more, are investing in procuring renewable power and installing energy-efficient equipment.

KEY TRENDS IMPACTING THE U.S. GREEN DATA CENTER MARKET

Increased Focus On Renewable Energy Sources and Efficient Cooling

• Hyperscale players such as Amazon Web Services (AWS), Google, Facebook (Meta), Microsoft, and Apple are procuring renewable energy for their facilities.
  • AWS meets 85% of its energy requirements from renewable energy.
  • Google, Facebook (Meta), and Apple meet 100% of their energy requirements for data centers from renewable energy.
  • Microsoft aims to power all facilities with 100% renewable energy by 2025.
• Colocation operators in the U.S. green data center market, such as Equinix, Digital Realty, CyrusOne, Vantage Data Centers, STACK Infrastructure, Iron Mountain, QTS Realty Trust, Aligned, and others, are proactively signing PPAs and procuring renewable energy to power their facilities to meet their sustainability goals.
  • Digital Realty meets 100% of its energy requirements for data centers from renewable energy.
  • QTS Realty Trust meets 35% of its energy requirements from renewable energy with a target of 100% renewable energy by 2025.
• The use of free cooling chillers will increase to reduce power consumption and carbon emissions by facilities. Also, the shift will increase towards liquid cooling leading to more sustainable data centers and bringing down PUE to a range of 1.1 to 1.4.
• Air cooling and liquid immersion cooling will also be used in most facilities to reduce their impact on the environment and reduce the PUE of data centers.
• Data center firms have also started investing in renewable energy farms by acquiring or developing their own.
• A few examples of the singing of PPAs or constructing renewable energy farms are -
  • Amazon signed a PPA with AES Corp. for 450MW solar power. Amazon will use it for California operations, including its data centers. In addition, Amazon is planning the construction of two solar farms in Louisiana in the U.S.
  • Google signed 942 MW PPA on solar power projects under development in Texas.
  • Microsoft has signed a 110 MW Power Purchase Agreement with AES to secure renewable energy for its Californian facilities.
  • CyrusOne collaborated with Gexa Energy, a NextEra Energy subsidiary, to procure solar (30 MW) and wind (10 MW) energy for its North Texas facilities.
  • STACK Infrastructure plans to build a new 216 MW data center campus in Ashburn, Virginia, powered with 100% renewable energy supplied by Dominion Energy

Increased support by local governments in the form of sustainable initiatives, incentives, and data localization laws

• Going back to 2015, the U.S. government had mandated all federal government data centers to install DCIM software and achieve a PUE of 1.5 or lower
• The U.S. department of energy announced a USD 42 million fund under Advanced Research Projects Agency-Energy (ARPA-E) project to fund suitable companies working in “high-performance energy efficient cooling solutions for data centers.”
• Oregon has announced its data center policy recently, citing that other states also may consider formulating such policy to reduce the environmental impact of facilities.
• The Florida Government has announced plans to eliminate its carbon emissions by 2045.
• The Georgia Government is setting goals for a 50 percent decrease in greenhouse gas by 2030.

SEGMENTATION INSIGHTS

Electrical Infrastructure – Efficient and Sustainable Power Infrastructure Replacing Traditional Power Systems

• The increasing demand for efficiency in facilities has fueled the growth of efficient infrastructure such as lithium-ion UPS systems, fuel cells, HVO, Natural Gas generators, nuclear energy reactors, and more.
  • Microsoft partnered with Plug Power to test a new power generation system with 3MW capacity, based on hydrogen as a fuel source.
  • Compass Data Centers and Foster Fuels made an agreement together to produce Hydrogenated Vegetable Oil- based biodiesel for Compass Data centers’ generators.
  • EdgeCore is using Lithium-ion UPS batteries in its Ashburn Data center campus.
  • Google has partnered with Fervo Energy to develop a geothermal power project to add clean energy to the Nevada power grid.
  • Rolls Royce announced its plan to offer small nuclear reactors for U.S.-based cloud operators such as AWS, Google, and Microsoft.
  • Woodstock Power company provides nuclear gas power backup generators to the facilities.
• Companies are using Microgrids and Smart grids to further stabilize power supply to the data center and back to the grid in the hour of need.
  • Microsoft has partnered with Eaton, which will outfit all of Microsoft’s data centers with grid-interactive UPS.
  • Microsoft has partnered with Enchanted Rock for its new Datacenter in San Jose, USA, where it will complete a Microgrid project for the facility.
• Companies are also considering using liquid metal batteries, sodium-ion batteries, and Nickel Zinc batteries. Though in the introductory stage, it may be revolutionary in the near future for the data center industry.

Mechanical Infrastructure – U.S. To Witness an Increase in Advanced Cooling Technologies

• Increased deployment of artificial intelligence and machine learning workloads will increase liquid immersion and direct-to-chip cooling in the U.S. It will help companies bring down their PUW to 1.4 or below.
  • S. food company Cargill announced plant-based immersion cooling for its facilities.
  • Facebook (Meta) has planned to shift all its existing facilities to liquid cooling.
• Companies have also adopted free cooling, zero-water cooling, and others to reduce their environmental footprint.
  • Cologix replaced condensing units in its New Jersey facility with air-cooling units supplied by Carrier.
  • T5 Data Centers deploy air-cooled chillers on all of its facilities.
  • QTS Realty Trust uses in-house developed zero-water cooling in all its new facilities.
• Innovative cooling techniques, such as underwater data centers and free chillers-based cooling technologies, bring in more efficiency in data center cooling.
  • In September 2022, The Backblaze signed 1MW of a facility at Nautilus’s floating data center in Stockton, California.
  • Apple uses a water-cooling process based on plants in Reno, Nevada, and Maiden, North Carolina, facilities.

General Construction – Increasing Adoption of Sustainable Material in Construction of Data Centers in the U.S.

• Hyperscale operators like AWS, Microsoft, Apple, and Google are taking the lead in using sustainable materials to construct facilities.
• In their facilities construction, companies introduce technologies like green concrete, modular data centers, and more.
  • AWS and American Rock Products collaborate to develop sustainable concrete for a concrete mix for its facility.
  • Facebook (Meta) announced that it had developed a sustainable low-carbon concrete with the help of Ozinga, its concrete partner, and the University of Illinois for its DeKalb data center.
  • Compass Datacenters is building facilities using concrete manufactured through the process developed by CarbonCure Technologies, which recaptures environmental CO2.
• The use of software and construction of facilities like waste treatment plants is taking center stage in newer data center developments in the U.S.
  • CoreSite has installed waste treatment-related new equipment like haulers, compactors, etc., at its various data centers across the U.S.
  • Data centers are using green walls to cover their facilities
  • T5 Data Center has partnered with nZero for carbon tracking across its facilities

GEOGRAPHICAL ANALYSIS

• Site-Selection for facilities across the U.S. will depend mostly on access to renewable energy.
• South-Eastern U.S. market will remain a hotspot of data center development in the near future, with more companies flocking to the region.
• Due to the lack of land and renewable energy availability in the Nort-East U.S., it will be the least preferred region for companies to set up the data center.
• The U.S. green data center market will witness increased interest from real estate and private equity firms entering the market, either by establishing a data center business unit or through joint ventures with operators to invest in hyperscale projects.

VENDOR LANDSCAPE

• Increased adoption of AI and software for carbon emission tracking, temperature monitoring, etc., is bringing AI and programming-based companies into focus for data center companies like nZero, and CarbonCure, which are developing and supporting facilities in sustainability.
• Renewable energy companies like Dominion Energy, Avangrid, EDF Renewables, ENEL Group, and many more are supplying renewable energy to data center operators. These companies are setting up new plants exclusively for data center companies, thus providing clean power sources for data center companies.
• Colocation vendors in the U.S. green data center market, such as Equinix, Digital Realty, QTS Realty Trust, Vantage Data Centers, CyrusOne, Compass Datacenters, and hyperscale vendors, such as Microsoft, AWS, Google, Apple, Meta, and others, are adopting lithium-ion UPS systems, Microgrid systems, Smart-grid systems, and many newer support systems.
• Companies like Eaton, Vertiv, Schneider Electric, and many others are supplying Lithium-ion based UPS systems, smart-grid solutions, and new switchgears compatible with different sources of power supplies.
• Construction contractors are now focusing on the sustainable development of facilities, with construction and design being critical for facilities considerations to adhere to standards about uptime and efficiency.