The new year coincides with ushering in a new era for the modern data centre industry. Josh Joshi, Executive Chairman, AtlasEdge, tells us that we should brace for AI-driven demands, strategic partnerships and regulatory entanglements which will inevitably redefine our digital landscape.
The modern data centre industry is 25 years old this year, marking an incredible quarter century where the internet, smartphones, the cloud and High-Performance Compute has transformed society. I think in another 25 years we will look back and see 2024 as a real turning point. We are about to enter the most strategically important year in the history of our extraordinary industry; everything that’s happened to this point, is just prologue.
Prediction #1: We will see unprecedented demand for capacity – the AI genie is very much out of the bottle
Having spent the last decade meeting massive and ever-growing demand for cloud deployments, this prediction might initially seem unrealistic. However, we are dealing with something very different to the legacy cloud deployments. These primarily involved moving existing workloads from one location to another and were fundamentally about making data collection and storage more efficient (both energy and compute), more user friendly and more secure.
AI is totally different. Fuelled by accelerated compute and neural networks, it will create a whole new set of workloads which don’t exist anywhere today. It’s a technological leap on par with the invention of the steam engine or the commercialisation of electrical production and distribution. The opportunity for our industry is daunting, yes, but enormous – and we are going to see more capital expenditure and construction than ever before.
Prediction #2: Data centre operators will need to become increasingly selective with whom they work
We’ve seen this movie before. The emergence of Generative AI has spawned over 20,000 new AI businesses (and no doubt an even higher number by the time this is published). This is a frenzy reminiscent of the e-commerce boom in 1997, when I first entered the industry.
We’re entering a period of similar turbulence and uncertainty, but it’s also an attractive one if we can get it right.
It is imperative for operators to understand their AI customers’ business models and revenue strategies. The industry must carefully consider how it can support the growth of AI without being tied to the ebbs and flows of individual AI businesses. You can expect data centre operators to engage even more closely with big AI platforms to help ensure that the right amount of the right capacity is being delivered to the right place at the right time.
Prediction #3: The data centre industry will start to build much bigger data centres closer to the regional ‘Edge’ – and it’s not why you think
Gone are the days when access to capital was the biggest barrier to growth. Access to power has become the new data centre currency, particularly in Europe. The cloud demand for data centres in the last five years has sucked up all spare grid capacity in traditional locations – causing moratoriums and local resentment. To meet the extraordinary wave of predicted AI demand, data centre operators will have to think long term about alternatives to grid power capacity.
To meet this demand, we will see some data centre operators announce the building of their own energy production capacity and/or massive PPA’s. This will take a decade to come to fruition and will unfortunately be too little, too late. The alternative is to locate AI compute architecture in regional Edge locations away from the usual constellation of cities where historical data centre investment has gravitated towards.
Prediction #4: Europe’s data centre industry will have to engage with regulators and policy makers more frequently
In 2024, the data centre industry will no longer escape regulatory and national policy scrutiny. Energy security, AI safety, personal data protection, identity security and sustainability are just some of the issues that will draw regulators and policy makers further into our world. Because, ultimately data matters, and data will matter more than ever as AI starts to command more resources than cloud.
European data centre operators will have to work with governments to deliver the critical digital infrastructure to ensure that Europe is not left behind. AI foundation model architecture will take national resources and priorities to implement, and more regulation may be the inevitable quid pro quo.
As an industry we need to be ready and proactively engage so we end up with a system that is the best it can possibly be.
Prediction #5: The data centre industry will finally stop thinking of itself as the endpoint in an energy cycle
As an industry, the pursuit of efficiency has been relentless. The amount of energy and resulting carbon emission that has been saved is astonishing. I think collectively, we can be proud of what has been achieved. However, there is still much more to be done on water usage and carbon mitigation – I think it’s also true that we have been slow to wake up to the fact that we are only one part of a complex energy cascade.
PUE’s value as a measure of data efficiency will continue to decline in 2024. As an industry, we cannot continue to measure our success as how efficiently we literally ‘heat the sky’ with our waste heat. Energy reuse must be incorporated into our targets and a PUE of 1.1 is no longer the target; next year, operators will be looking to achieve effective sub 1.0 PUE targets after energy reuse.
This will be achieved by ramping up the use of intelligent power architecture within data centres and recycling heat on a significantly wider scale. In 2024, you can also expect to see operators try to commercialise this recycling, working with governments to sell their excess heat to organisations and businesses.
