Iron Mountain: Power grabs, geopolitics & green reporting
When considering data centre growth, this year (2023) has been incredibly unique. With cloud services and the colocation market anticipated to continue increasing into 2024, the sector’s digital transformation efforts show no signs of slowing down.
Information management company Iron Mountain expects that 2024 will be much the same, with enterprises continuing to seek out new and creative approaches to supply.
With this in mind, Data Centre Magazine speaks with Mark Kidd, EVP & GM for data centres and asset lifecycle management at Iron Mountain, about the company’s predictions for 2024. These include how climate reporting will ultimately impact power management and the digital transformations of the wider data centre sector.
“Power Grab”: AI and fibre are set to expand digital capabilities
Mark Kidd surmises that power will continue to be a key focus for data centres, with pressure on electrical grids “driving new investment in generation components, hubs and energy sources.”
He says: “Geopolitics will also enter the equation, combining with climate reporting legislation to make granular reporting of everything from raw materials to CUE an urgent task.”
With the growth of generative AI within the data centre sector over the past twelve months, more enterprises are keen to invest in new technologies in order to digitally grow. These tools are creating a huge impact for data centres and, as a result, business investment is leading to greater innovation.
Kidd says: “Early investment in power-hungry generative AI drove phenomenal growth last year, with as much as 50% in additional global capacity delivered in a single year. A lot of negative economic forecasts failed to come true and business fundamentals are still strong.”
The Economist in particular has cited that the particular growth sectors to look out for in 2024 include government, defence and healthcare, which for the first time ever accounts for over 10% of global GDP, Kidd says.
However, will supply match demand in 2024? Kidd suggests that over the last six to twelve months, available data centre capacity has been “soaked up by the giant power sponge of AI planning”.
“AI will lead to design impacts on data centres,” he says. “Even if the demand for AI capacity slows, replenishment of capacity will not be able to keep pace with demand, particularly in Tier 1 regions.
“New entrants are looking to make the most of the opportunity this presents. Established operators are still managing to turn up or fast-track opportunities from their portfolio, as [Iron Mountain] is doing in Miami. Powering land has also attracted some speculators as the demand and returns are high. This will likely lead to the identification of new capacity zones outside the most developed markets.”
Kidd also states that significant new global fibre routes will come online, accelerating performance and creating opportunities. He says: “New cable projects are underway to add higher performance and redundancy and lower costs in the Middle East, particularly for backup around the Suez Canal, a well-known connectivity pinch point. Both the Africa-1 and 2Africa subsea cables will also complete, speeding traffic between Africa, Europe and the Middle East.”
Iron Mountain understands that generative AI will revolutionise the infrastructure that supports it, given that it will inevitably deliver huge economic value in the near future. Given that it will also use large amounts of power, Iron Mountain has suggested that generative AI applications can often be hosted in specialised shared facilities.
Climate reporting and geopolitics to shape digital developments
Sustainability and ESG principles have also been vital developments within the data centre sector throughout 2023. Kidd highlights that an 11% increase in renewables use is expected for next year, but will only account for 14% of the overall global energy use. This suggests that there is still a long way to go to reduce emissions.
In particular, UNCTAD’s World Investment Report highlights that US$4tn per year will be required to upgrade the electrical grid as the global transition to low-carbon electricity speeds up.
Kidd says: “The need for data centre power is now creating competition for key power-generation components including utility scale transformers.
“Considering this pressure on the green grid, some data centre operators may be tempted to select transitional solutions such as gas, but these delay addressing the core problem which is total decarbonisation. The gulf between short-term and long-term power strategies will widen in 2024, raising questions for the industry and its customers.”
Iron Mountain also predicts that geopolitics will add its weight to a new sheaf of global, US and EU climate reporting requirements to demand much higher levels of transparency in 2024. Ultimately, accurate reporting of Scope 1, 2 and 3 emissions can provide transparency on an organisation's yearly emissions. They are a vital step in enabling companies to assess and evaluate current emissions and identify strategic areas for improvement.
On this, Kidd says: “Geographical provenance will be required right down to the raw material level for government contracts and the industry will diversify its supply chains fast in areas like Vietnam, Eastern Europe, Mexico and India.
“Greater transparency will also be required to meet new climate reporting regulations across the full asset lifecycle, from production to retirement to reuse, as environmental impact targets broaden to take account of Scope 3 emissions.”
Considering the long-term, Kidd says: “2024 looks like being an exciting year again, with lots to play for and developments that will change the data centre landscape.
“Creative site selection and speed to market will have major impacts on the bottom line, while geopolitical considerations and new regulations put both forward and reverse supply chains under the spotlight. For infrastructure operators, getting the balance right between short-term opportunism and long-term systemic improvements will be key.”
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