Amsterdam’s datacentres face challenges to retain high growth

The Amsterdam datacentre market is growing rapidly, but the industry behind it must get on top of some burgeoning challenges

Amsterdam is the largest datacentre hub in Europe, and it grew by around 20% in terms of megawatts (MW) in 2018, according to a report from the Dutch Data Center Association (DDA).

It was the fifth consecutive year that DDA carried out its State of the Dutch Data Centers research into the Dutch datacentre market, and the 2019 instalment sheds light on an emerging market.

“There are not many figures available about this market, because it is relatively young,” said Stijn Grove, managing director at DDA.

“Real estate company CBRE has been collecting data on this market for eight years, but it is mainly looking at colocation. We have examined and extrapolated their dat, and we have included the hyperscales in our research.”

As in previous years, the Dutch market grew in double digits in 2018. Total capacity in MW increased by 18% and the 189 Dutch colocation datacentres together now cover some 369,000m2 of floor space.

The centre of gravity of this is in the Amsterdam region, where some 72% of all datacentres are located. Over the past eight years, this region has experienced an average annual growth rate of 18.5% in capacity.

“We do count within a 50-kilometre radius of Amsterdam, as the cities we compare to – London, Paris and Frankfurt – are much larger. For the Netherlands, this means that the datacentre campus in the Wieringermeer is included under Amsterdam,” said Grove.

“For foreigners this is quite logical, the campus is not called North Amsterdam for nothing. An American who has to drive half an hour still thinks they are in the same city.

“The Netherlands is a country with relatively short distances. Even the most northerly datacentres in Groningen can be reached within an hour and a half's drive of Amsterdam,” he added.

Grove added that Amsterdam has a unique combination of colocation and hyperscale datacenters. The interconnectivity in the Amsterdam region is extremely high and is attractive for providers of business to business services.

“Applications that consist of multiple elements and that have to exchange data with each other want to be physically close to each other,” said Grove. “That saves latency and the cost of making connections.”

This also explains the strong growth of the region in the area of datacentres. “You can see that traditional market forces also play a role here. The larger the market, the more choice, the lower the price and the better the facilities,” said Grove.

This is the great advantage of a large concentration of companies together, he added. “And that applies not only to the companies that supply applications and data, but also to the entire ecosystem surrounding them. Datacentres must be designed, built and managed. All these types of parties are also based in Amsterdam.”

Challenges in growth

Despite the undoubted opportunity, the continued growth of the market has its challenges – for example, such as in the field of energy distribution and the availability of green electricity.

The power consumption of datacentres is a much-discussed topic. In recent years, datacentres have taken action by investing in sustainable energy solutions and the use of green power, with 80% of DDA participants now only using green power.

Another challenge is the growing shortage of personnel.

“Every sector that is growing as fast as the datacentre market is faced with the challenge that not all of the things around it are growing at the same pace,” said Grove.

“This is certainly true in the field of education. In the Netherlands, we not only need high-tech IT professionals, but above all, we need mid-level technicians in the field of electrical and thermal engineering.”

The infrastructure of the current energy networks is another challenge. “The world is digitising. IDC predicts that by 2021, 50% of GDP will come from digital services,” said Grove. “This should include a strong energy infrastructure, but in fact our current networks are not built on this digital economy and energy transition.”

However, this is not just a Dutch problem. “This is a challenge throughout Europe. No other power network is built on such a major revolution towards a digital society,” said Grove.

Residual heat

Any successful datacentre infrastructure will produce significant volumes of waste heat, which produces more challenges. The DDA is actively involved in accelerating waste heat projects in which datacentres play a role. 

“How nice would it be if we could use the heat from datacentres in the rest of society? Unfortunately, we do not yet have a law or heat networks to make this possible. Connecting energy flows to each other will be a major challenge in the coming years,” said Grove.

Meanwhile, 46% of the DDA members re-use their residual heat, 13% are involved in the roll-out of a heat network and more than 33% of the members have plans for residual heat reuse in the near future. So it is definitely a hot topic for the Dutch datacentres.

According to Grove, there is still a lot of work to be done. “For the datacentres as well as the network operators, energy suppliers and regional governments, it is time to use residual heat and thus contribute to the energy transition. As the largest data hub in Europe, it is time for the Netherlands to take the lead in this area as well,” he said.

The DDA is a well-organised sector organisation, said Grove, and it is active throughout Europe to help set up branch organisations.

In the Netherlands, the DDA is actively involved in amending laws to make heat supply possible. The organisation has, in coordination with the government, also launched the National Data Centre Plan and is working on a national power plan.

“These things may seem like small steps, but they are incredibly important. These are simply long journeys in which we cannot make a difference from one day to the next. The sooner we start, the sooner the solutions will be on the table,” said Grove.

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