A Collaboration between KPMG and LandGate
What Are Data Centers?
Data Centers are specialized facilities that store data for businesses and organizations. They consist of a network of computer systems, storage equipment, and a network of servers that support data processing, storage, and distribution. As LandGate data forecasts, the United States data center market is the leading market for data storage and is expected to double its power capacity by 51.4% over the next decade. This supplements market estimates that indicate that data centers will comprise 8% of US Power consumption by 2030.
Data centers are an essential part of the digital economy while maintaining internet growth and online service demand. Across the market, different types of data centers exist, ranging from hyperscale to enterprise, and colocation projects, offering multiple opportunities for investment into data.
Hyperscale data centers are large data centers, usually owned by a singular organization. These data centers span over 100 acres, with the market average for their size being 400 acres. They are able to store large amounts of data and are often owned by companies with vast data and processing needs. Companies such as Amazon Web Services, Google, and Meta lead hyperscale projects within the US data center market.
Enterprise data centers are owned by companies to meet the specific needs of their end users. These data centers often exist on data center campuses, and offer multiple opportunities for company employees.
Colocation data centers are large data center facilities that rent out space to third parties for their servers or other network equipment. Colocation data centers serve to be the most popular type of data center within the market, as it gives companies the opportunity to invest in data storage without having to pay for building, construction, and other miscellaneous costs. It also allows data storage across a multitude of locations.
While colocation facilities have the most market traction, they also prove to be the most profitable data centers across the different types. However, with recent increases in investment into the data center market, the hyperscale facilities are seeing an overall rise in numbers, earning them a close second place to their colocation counterparts.
What crucial details are essential for understanding data centers?
The US data centers are some of the largest markets across the world with Texas and Virginia being far ahead of any other market globally. Leading states include Texas, Virginia, California, New York and Florida. While these states have been consistent in increasing their data center capacity, states such as Illinois, Arizona, Georgia and Oregon have seen considerable growth over the last five years, welcoming over 500 MW of data into the state each.
Each data center is home to multiple factors that determine its operational capacity and overall value in the market. White space is known as the area within a data center that stores IT equipment that is or can be used for additional storage or computing while gross max power gives insight to how much power the data center is using. The power usage effectiveness is a metric to determine the energy efficiency of the data center in the form of a ratio calculated by dividing the total amount of power entering a data center by the power used to run IT equipment and data storage utilities. The closer the ratio of power usage effectiveness is to 1, the more efficient the data center. The current national average for power usage effectiveness across the United States is 1.5. Other data center specs that LandGate provides include the year of operation, building size, and parcel acreage.
LandGate’s extensive state profiling assesses development, economic impact, technological advancements, and off-take capacity analyses across the region and highlights the critical functions of each in supporting growing energy demands. LandGate stands out as the only platform providing a comprehensive profile on the US data market including data centers, fiber optic lines, and off-take capacity. With over 95% of data centers in exact locations, LandGate exclusively offers its users the most precise data for white space, gross max power, power usage effectiveness (PUE), year of operation, building size, and parcel acreage data across data center resources.
What Makes For a Good Data Center?
A number of different factors go into determining the efficiency and productivity of a data center. Location has a crucial impact on operational efficiency, cost, and even the lifespan of the facility. A well-chosen site can lead to better energy consumption, lower latency, and increased security. For developers, understanding these factors is essential in making a strategic and cost-effective decision.
Data center proximity to network hubs can dramatically affect its performance. Being closer to major network nodes reduces latency and enhances the speed of data transmission. A robust fiber optic network is essential for high-speed data transfer. When evaluating potential sites, the local infrastructure is needed to support data center bandwidth requirements. To guarantee uptime, data centers should have redundant connectivity options. The most common source for redundancy is natural gas or nuclear power. Multiple fiber paths and diverse routes can protect against outages and ensure continuous operation.
Water supply is also essential for data center cooling methodologies, and waste management systems play a major role in overall operational efficiency.
There are also several climate considerations that must be taken into account when developing a data center. Cooler climates can reduce the need for extensive air conditioning, lowering both your energy consumption and costs. Additionally, understanding local zoning laws and permit requirements is crucial for avoiding legal complications.
Moreover, each state will have its own set of tax incentives to build and develop data centers as well as regulatory and zoning requirements. Some major states also have programs that enable the growth and expansion of data centers and ensure that other industries, such as construction, maintenance, and IT, also benefit from these large investment projects.
Natural disasters such as floods, earthquakes, and hurricanes can severely impact data center operations. Compliance with local environmental regulations is essential to avoid legal issues and ensure smooth project execution.
The data center depicted below is Apple's massive data center in Mesa, Arizona, which spans over one million square feet and is designed for high efficiency and security. The facility utilizes renewable energy sources, including solar power, to minimize its carbon footprint as shown in the LandGate data analysis below. The facility supports over 1100 employees and created over 30,000 jobs across construction, maintenance, and corporate industries. Overall, the Mesa data center exemplifies how large-scale operations can prioritize ecological impact while meeting growing demand for digital services.
What is the Role of Offtake Capacity in the Operation of Data Centers?
Offtake capacity refers to the amount of energy that can be safely and reliably withdrawn from the electric grid at any given point to power various installations and utility projects. This capacity is a critical factor in ensuring that energy supply meets the demand of facilities like data centers, industrial plants, and other large-scale operations.Offtake capacity is a cornerstone of effective grid management, essential for sustaining economic efficiency and service reliability in the face of evolving energy demands.
At its core, offtake capacity involves a commitment between a seller and a buyer for the sale and purchase of energy or resources. This capacity can be quantified in terms of megawatts (MW) for electricity or other relevant metrics for different resources. Offtake agreements help mitigate the risk of price volatility and supply shortages by locking in terms that provide stability for both parties. For data centers, these agreements are especially important as they support operational continuity and align with sustainability goals by facilitating the procurement of clean energy sources.
Offtake capacity plays a pivotal role in the operation of data centers by providing a stable and reliable energy supply, which is essential for uninterrupted service delivery. By securing energy through offtake agreements, data centers can better manage operational costs and protect themselves against market fluctuations. Additionally, these agreements often facilitate the procurement of renewable energy, helping data centers meet sustainability targets and reduce their environmental impact.
Moreover, understanding available offtake capacity allows data centers to plan for scalability, ensuring they can accommodate increasing demand without risking energy shortages. Strong offtake arrangements not only enhance the financial viability of data center projects, making them more attractive to investors, but they also support compliance with regulatory standards concerning energy consumption and emissions. Ultimately, offtake capacity is integral to the operational and financial stability of data centers in an increasingly competitive and environmentally conscious landscape.
What Future Trends are Shaping the Sustainability of Data Centers?
The sustainability of data centers is increasingly shaped by advancements in energy efficiency technologies and innovative cooling solutions. As the demand for data processing continues to rise, data centers are adopting more efficient hardware and software practices, such as virtualization and containerization, which optimize resource use. Additionally, the integration of artificial intelligence and machine learning in operational management allows for real-time monitoring and predictive maintenance, significantly reducing energy consumption. Moreover, modular data center designs are gaining traction, enabling scalability while minimizing waste and maximizing the use of sustainable materials.
The growing demand for renewable energy is also profoundly influencing data center development, as companies strive to align their operations with global sustainability goals. Many organizations are investing in on-site renewable energy generation, such as solar panels and wind turbines, to reduce their carbon footprint and achieve energy independence. Furthermore, data centers are increasingly entering power purchase agreements (PPAs) with renewable energy providers, securing a stable supply of green energy. This shift not only mitigates environmental impact risk but also appeals to consumers and investors who prioritize corporate responsibility. As a result, the data center industry is evolving to become more resilient and sustainable, driven by a commitment to harnessing clean energy sources.
