Disruptions in the Data Center Market

The global data center market is under an unprecedented squeeze as we move into 2023.

On one hand, we have a long-term challenge surrounding the sustainability of the industry’s growth trajectory in essential hub markets. On the other, we have an acute short-term problem with energy prices in the colocation sector.

These issues combine to create an uncomfortable phase in the market right now.

This is what I unpacked during my presentation at PTC ’23. I started with a look at the growing long-term question—can utilities support the pace of capacity growth in the data center sector? 

My slides focused on the current situation in four of these markets—Singapore, Amsterdam, Frankfurt, and Washington. I fleshed out the actions that regulators are taking in these hubs and how the market’s responding.

I then turned to the short-term problem we’re facing—energy market volatility. For the industry, the question is whether soaring power prices directly affect colocation rates and whether costs are about to become very uncomfortable in the data center space.

The answer? It isn’t very easy, but yes. The bottom line is that prices have started to rise and are expected to go higher in 2023.