The UK data center market will grow at a CAGR of 7.8% during 2016-2022, with an estimated market value of US$13 billion by 2022, according to predictions. The rising demand for cloud computing services and increased usage of smartphones and tablets are key factors driving this growth.
The UK data center market has been performing well in recent years. A report from CBRE suggests that the country's total available capacity will increase by more than 4 million square feet in 2022.
UK Data Center Market Segments
Based on Type, one can categorize the UK data center market into Core, Edge, and Cloud Computing Data Centers.
Based on End Users, the UK data center market has been segmented into BFSI (Banking, Financial Services & Insurance), IT & telecom companies, healthcare organizations, manufacturing, and retail organizations.
The public cloud segment accounted for more than 50% of the overall data center market in 2019 and is estimated to grow at the highest CAGR during the forecast period. The public cloud segment has been expanding rapidly due to increased technology usage and digitalization in businesses, which results in massive demand for information management services.
The private cloud segment will grow significantly between 2020 and 2022 due to the increasing need for scalability and disaster recovery capabilities.
The managed service offerings segment will grow at the highest CAGR between 2020 and 2022 due to lower costs associated with managed service offerings compared with on-premises solutions, which leads to increased adoption among enterprises, according to estimations.
Major Drivers and Restraints
The global data center market will reach USD 104.00 billion in 2022, growing at a CAGR of 5.8% from 2019 to 2022. The report covers data center equipment and services, including servers, storage devices, networking equipment, and software applications used by enterprises and service providers.
The UK has seen an increase in demand for data centers due to the rising adoption of cloud services and the increasing need for high-speed internet. However, the high cost of real estate poses a challenge to the growth of this market.
The key factors driving the growth of this market include increasing demand for cloud computing services, rising need for disaster recovery and business continuity solutions, and increasing investments in IT infrastructure by various organizations.
The growing adoption of IoT (Internet of Things) devices has increased the need for data centers to store and process large volumes of data faster.
However, a lack of skilled workforce, high energy costs, security concerns, and stringent government regulations are some of the challenges faced by this market during the forecast period.
Energy Prices Extremely Increased
The current energy price increased significantly due to the Russia-Ukraine war. The UK's National Grid has warned of a possible power shortage in the coming months and urged consumers to use electricity sparingly, including during peak times.
According to expectations, the UK faces blackouts this winter as electricity demand will outstrip supply by 300 megawatts (MW), according to expectations.
The situation gets worse by recent cold weather, which has led to higher demand for heating.
The National Grid said it was "working with the government" and other industry organizations to ensure they could generate enough electricity. Still, it warned customers not to rely on their usual supplies.
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Conclusion
This rise in energy costs has significantly impacted the UK's electricity price for data centers. Some of these costs have become prohibitively expensive for many companies operating out of London and other major cities like Manchester and Birmingham.
Indonesia is an ideal alternative location because it offers cheap residential electricity rates and low humidity levels, which help reduce cooling costs compared to other countries like Singapore and Malaysia.
According to research from real estate advisory firm Cushman & Wakefield, the data center sector will generate £6.8bn in revenue by 2024, up from £3.9bn in 2019. This represents an average annual growth rate of 11% over the next five years, making it one of the fastest-growing industries in the UK.
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