Andrew Fettes-Brown, Head of Data Centres, Europe Global Board Director, RLB, lays the foundation of Rider Levell Beckett’s (RLB) recent Data Centre Trends 2024 report, providing an overview of the European supply chain landscape in the data centre market.
Excitement about the potential of Artificial Intelligence (AI) has been growing steadily for a decade. But since the launch of ChatGPT in 2022, a sense has taken hold that AI is not just a tool but a new, era-defining technology paradigm.
This, along with the continued growth of cloud, means that demand for data centres far outstrips supply. Operators and contractors have a commercial opportunity that most industries would envy.
But the stark realities of the physical world have complicated the picture. The war in Ukraine revealed the vulnerability of Europe’s construction supply chain and, although prices and lead times have relaxed since their peak in 2022, they are still at a heightened risk of disruption.
The climate crisis is adding to the pressure. The sustainability requirements of regulators and occupiers are stoking demand for more efficient infrastructure components, while climate change itself places supply chain operations at risk of physical disruption from extreme weather events.
The data centre sector is rightly focused on improving efficiency and securing an affordable, sustainable supply of energy, without which its facilities cannot operate. But the supply of construction materials also warrants its attention, not least because – at the time of writing – geopolitical risk is once again threatening global trade routes.
We surveyed 475 executives from data centre operators and contractors across the UK and Europe to examine how the sector is experiencing construction supply chain risk. These executives expect supply chain risks to grow this year and the price of materials and components to increase with it.
This, combined with ever-longer lead times, is placing the industry under strain, our comprehensive survey shows. Despite growing demand, around a third of operators we surveyed have cancelled planned data centres due to supply chain constraints, while most contractors have turned down projects they deemed too risky.
There is more at stake here than the data centre sector itself. Europe’s digital future depends on a resilient, sustainable data centre construction supply chain.
A new, more collaborative approach is needed. Operators and contractors are already using contractual measures to share risk, our survey reveals, but this can go further. Greater transparency can build trust, while helping both parties plan for the future, anticipate and mitigate risks, and meet demand both sustainably and profitably.
