Sweden comes a close second in the index. Like its neighbour, it ranks strongly in IT infrastructure, innovation and talent as well as ranking fourth in the energy category, due to a favourable climate and a widespread focus on renewable energy supply.
Other Scandinavian countries feature in the top ten, with Finland in fifth – scoring highly for support infrastructure, energy, and talent – and Norway in sixth, while nearby Estonia finishes in tenth position.
The US is in third position and scores well for market conditions and preparedness for cybersecurity attacks. The US and Canada (in eighth) are the only non-European countries in the top ten.
The Netherlands (fourth), the UK (seventh) and Germany (ninth) completed the top ten.
Our interactive chart can be used to analyse the results:
The importance of data centres
The increasing use of data worldwide is driving the data centre market on its upward trajectory. As technology evolves so too does the role of data centres in collecting, storing, processing and distributing data.
More recently, the Covid-19 pandemic has highlighted the need for reliable data services for the many millions of people who have found themselves working from home. According to Reuters, daily active users of Zoom rose to 200 million in March 2020, from ten million in December 2019, a 3,857% increase in only three months.
While the size and capacity of data centres is increasing, key players are also having to adapt to changes in demand as well as the use of renewable energies.
The world’s largest data centres
The Citadel in Tahoe Reno, Nevada, is the world’s largest data centre. It is owned by Nevada-based Switch and spans 6 68,902m². It also hosts the largest data centre building, Tahoe Reno 1 at 120,774m², exceeding Lakeside Technology’s previous record of 102,193m².
Northern Virginia is home to Amazon Web Services’ (AWS) largest data centre hub worldwide with a total of six AWS availability zones in the region. In 2020, Amazon’s subsidiary, Amazon Data Services, purchased 40 hectares of land in Chantilly, Virginia, for $73m. CBRE reported that Northern Virginia was the first data centre market globally to exceed 1,000MW, with an anticipated growth rate of 25% in 2019.
The companies and operators leading the data centre charge
The latest report by Research and Markets, Data Centre Colocation Market – Global Outlook and Forecast 2020–25, states that Equinix is the key player in the global industry, with a market share of approximately 11.5% in terms of colocation revenue, followed by Digital Realty.
Aside from data centre operators, companies themselves are choosing to open their own data centres, instead of using the services of data centre providers.
According to Google, it operates 14 data centres globally, with another seven under construction. In 2020, the company announced plans to invest more than $10bn in offices and data centres across 11 US states.
Baxtel – an information source for data centres – states that Microsoft operates 19 data centres globally, with six under construction. The company opened its first data centre in 1989, and in the second half of 2020 announced plans for new centres in Greece and New Zealand.
AWS has 77 ‘availability zones’ in 24 countries around the world and plans to open 15 more and enter five new countries: India, Indonesia, Japan, Spain and Switzerland.
Hyperscale data centres
As the data centre market continues to evolve, the demand for hyperscale data centres – defined as enterprise data centres, but on a much larger scale – is increasing.
Research and Markets states that the hyperscale data centre market is expected to grow at a compound annual growth rate of more than 2% a year between 2019 and 2025.
Synergy Research reported a total of 504 hyperscale data centres globally in the third quarter of 2019, a 29% increase on the 2017 figure.
Synergy also stated that in the first three quarters of 2019, hyperscale operators including AWS, Google and Microsoft dominated the market, accounting for one-third of spending on data centre hardware and software, up from 15% in the first three quarters of 2014.
In 2019, Equinix formed a joint venture with GIC, the sovereign wealth fund of Singapore, to develop and operate hyperscale data centres in Europe, as a result of an increase in demand from hyperscale companies. In 2020, the company formed another joint venture with GIC worth more than $1bn to develop and operate hyperscale facilities in Japan, with three facilities to be opened initially.
“Growing appetite for energy efficiency, the economies of scale in IT infrastructure and the concentration of the cloud computing industry all motivate the so-called ‘hyperscale’ cloud providers to build ever bigger data centres,” says Tech Monitor editor-in-chief Pete Swabey.
How data centres can reach remote customers
In recent years Microsoft has noted the need to provide data to remote locations and be closer to customers. This led to the first underwater data centre, off the coast of the Orkney Islands in Scotland, which Microsoft sank in 2018. The concept was based around providing super quick cloud services to coastal populations. Two years on, the results have been promising with a lower failure rate than conventional data centres and the low temperature of the sea providing energy efficiencies.
In 2020, Microsoft designed the Azure Modular Datacentre, a portable data centre aimed at providing cloud computing to remote locations that struggle to receive reliable services. The modular data centre is structured as a box of servers, and Microsoft has partnered with satellite operators to allow it to be used as a mobile command centre to provide military or humanitarian support.
Renewable-powered data centres
The world’s first climate-positive data centre, Eco Datacenter, is located in Falun, Sweden. Created as a joint venture between Falu Energi & Vatten and data centre operator EcoDC AB, the company was acquired by Nordic real estate developer Areim in 2018. Schneider Electric partnered with the company to provide energy-efficient technology.
The data centre runs entirely on renewable energy source s and excess heat is fed into the district heating network. It is among the best in the world in terms of efficiency, with a power usage effectiveness ratio of 1.15, compared with a global average of 1.6.
“Europe has inexpensive and stable renewable power,” says Eco Datacenter CEO Lars Schedin. “The proximity between data centres and power plants in many countries also minimises distribution losses.”
With more data being processed than ever before, data centres are becoming bigger, more powerful and more technologically advanced. This has meant that more emphasis is being placed on renewable energy to power them and companies are finding new ways to reach an ever-growing consumer base. Factors such as security, IT infrastructure, risk and energy are at the forefront of many companies’ considerations when establishing a data centre.
The key players in the market are unlikely to change in the near future, but new trends will inevitably lead to the introduction of new companies. In 2020, TikTok announced plans to open its first European data centre in Ireland, valued at $500m, while Zoom opened its first data centre in South East Asia in Singapore.
With more emphasis being placed on renewable-powered data centres, Scandinavia is likely to remain a desirable data centre market, making the likes of Denmark and Sweden hard to shift from the top of Investment Monitor‘s ranking.
Investment Monitor analysed 55 countries across 29 indicators. All countries had full data coverage for all indicators. These indicators were combined into eight categories – security, IT infrastructure, support infrastructure, cost, market conditions, energy efficiency, innovation and talent.
All raw data values were standardised to a scale of 1 (worst) to 10 (best), taking into consideration the orientation (whether a higher value is better or worse) of the indicator. Each indicator was weighted. A higher weight indicates more importance to the overall index score. The overall index score was the summation of the standardised scores multiplied by the weight.
The formula for a positively orientated indicator was:
ISic=[ (valueic−Min valueic)∗9(Max valueic−Min valueic) ]+1
The formula for a negatively orientated indicator was:
ISic=[ (valueic−Max valueic)∗9(Min valueic−Max valueic) ]+1
Where ISic is the individual indicator score for indicator i for country c; valueic is the raw value of country c for indicator i; Min valueic is the lowest raw value for indicator i of all countries, c; Max valueic is the highest raw value for indicator i of all countries, c.
OSc is the overall score for country c; i is an indicator; n is the total number of indicators; ISic is the individual indicator score for indicator i for country c; Wi is the weight for indicator i.
The interactive graphics in this piece were made by Georges Corbineau
This article is part of a series on data centres run by the New Statesman Media Group’s Monitor Network. Please see related coverage on our sister sites Tech Monitor and Energy Monitor:
Why the Nordics are the best place in the world to put a data centre
How a French electrical company became a digital energy leader
Canada is the best country for energy-efficient data centres
Featured photo by Jacques Demarthon/AFP via Getty Images.
Glenn Barklie is chief economist at Investment Monitor and head of FDI services at Global Data Media.
Christine Patton is senior economist at Investment Monitor and a global expert on cross-border investment.