Scotland could be an “increasingly attractive” destination for co-location datacentres owing to capacity issues affecting Europe, according to an industry expert.
There is potential for Scotland to increase its market share due to advantages such as its cool climate and access to renewable power, said Kevin Restivo of real estate giant CBRE.
At the moment Scotland’s power output from co-location datacentres is under 10 megawatts (MW), compared to England – Europe’s largest market driven largely by London – which well exceeds 1,000 megawatts of built capacity, said Restivo, head of datacentre research for the firm. Co-location is where multiple customers rent out or buy space from datacentre providers.
“England is easily the biggest part of the market, of the UK market. And that’s a function of the capacity in London,” he said. “The Scottish datacentre market is quite small, compared.”
“In Scotland, virtually all the datacentre development has happened in that corridor between Glasgow and Edinburgh, with one in Dundee and one in Aberdeen.
“But I think the Scotland market is increasingly attractive because there are capacity and availability issues right now across the continent [Europe], not just in the UK, but it’s been dropping steadily.
He added: “That matters, because developer operators, and some of the largest international operators, like Digital Realty, Equinix and Iron Mountain, these are companies that are increasingly looking for new places to develop datacentre space because there’s a lack of resource in the south and, for that matter, on the continent.”
Restivo is part of the CBRE team that produced the recent Europe Data Centres Q2 report, which showed that the vacancy rate in the primary Frankfurt, London, Amsterdam, Paris, and Dublin (FLAPD) market for co-location datacentres dropped under 10 per cent for the first time.
The report said: “Providers are struggling to keep up with demand. A lack of available power and appropriate land makes it difficult for providers to build datacentres.
“Yet demand from large American technology companies has risen. Hyperscalers need more space to ensure their plans are met.
“As a result, take-up regularly exceeds the new supply delivered in most large European metro markets.”
CBRE classifies countries outside the FLAPD market as ‘secondary markets’ and of those it said Madrid, Milan, Warsaw and Zurich have the largest supply pipelines this year.
Scotland, due to its small size, does not feature in the report. However, Restivo said: “When it comes to consideration – and that’s the key word – Scotland is in the picture more than has been in past.”
“And it does offer certain advantages: renewables is definitely one advantage, plus the cool, damp climate. Datacentres are resource intensive, and so that matters greatly in terms of cost of operation. And so, in theory, your cooling costs will be lower because of the climate in Scotland.”
On the flip side, the distance between Scotland and the concentration of large customers for co-location datacentres could affect its viability as a destination.
Restivo added: “I think what will continue to hinder Scotland as a potential destination for, again, datacentre providers and their customers, is just the sheer distance from Scotland to, well, really anywhere, but specifically London, where location matters.
“If the top buyers of capacity out there already have equipment located in the south in certain datacentres, and say, the western corridor of London, it’s less advantageous for them to move.”
Speed of data transfers – in latency terms – to end users, also matters, in particular for industries like mobile gaming and high-frequency financial trading, so again that would potentially affect Scotland becoming a destination for some customers, said Restivo.
However, he said available resource is higher on the priority list than ever, relative to performance.
“The development radius is widening. In other words, they’re going to potentially put their kit elsewhere, or data providers are going to build that facility elsewhere, because there’s just simply not the power to have a new datacentre built where they would ideally want it located.”
And given the recent moratorium on new grid connections for datacentres in Dublin – due to capacity constraints – could Scotland be in line to benefit?
Restivo said: “And so, grid capacity, whether it’s because of transmission bottlenecks or generation issues or what have you, this is a concern around the continent to varying degrees, and that makes alternative locations more interesting and that puts Scotland and a whole host of others on the radar.
“But Scotland is one of the smaller tertiary markets that we don’t currently size, and we haven’t forecasted it. But it’s part of a wider array of cities and countries that are being considered now for datacentre development, and Scotland, I would argue, is on that long list.”
