Carbon Neutral Data Center Market - A Global and Regional Analysis: Focus on Carbon Neutral Data Center Types & Solutions, End-Use Industry, Government Programs, Trends, Opportunities and Country Analysis

Jan 2021| BIS460A| BIS Research

Report Highlights

The carbon neutral data centers market is projected to reach $9.42 billion by 2025, reveals the premium market intelligence study by BIS Research. The study also highlights that the market is set to witness a CAGR of 22.17% during the period 2020-2025.

The comprehensive study of the global carbon neutral data centers market extensively covers the following:

  • Competitive benchmarking of 24 key players that are influencing the carbon neutral data center market, based on their market coverage and market potential
  • Elaborate landscape study on government programs and initiatives dictating different regional markets including North America, Europe, Asia-Pacific, China, Rest-of-the-World
  • Analysis and estimation of the global market size of the carbon neutral data center during the forecast period 2020-2025
  • A detailed global and regional analysis of carbon neutral data center solutions and associated technologies, including growth trends, driving forces, companies involved, and estimated carbon neutral data center market size for 21 countries and group of countries
  • Qualitative analysis on market transition journey from traditional data centers to green data centers and eventually carbon neutral data centers.

Besides these parameters, the study also encompasses the market growth drivers, opportunities, market restraining factors, competition mapping, segmental analysis, and the regional landscape of the market.

BIS Research study indicates that the continuous generation of process data across organizations which led to the need for data centers, rising demand for improved cooling efficiencies, and growing market penetration of carbon neutral solutions and technologies, are fueling the growth of the market. Apart from these, the market is also influenced by various environmentally friendly government initiatives and policies.

The study highlights the various emerging opportunities, such as the rapidly advancing smartphone and tablet market, and the rise of 5G and 6G communication technologies that can be leveraged by players operating in the market.

The market intelligence by BIS Research additionally throws a spotlight on the key industry trends that have a humungous influence in shaping the industry going forward. Some of these trends include the increased emphasis on efficient cooling systems, increased demand for renewable energy especially for the ICT industry, and several other key trends.

To gain a holistic view of the market, data from different segments of the market has been analyzed minutely. These segments include different data center types, end-user industry served, market by solution such as hardware, software and platform, and services and regions. Each of these segments is further categorized into sub-segments to compile an in-depth study.

According to Arvind Pal, Lead Analyst – BIS Research, "Carbon neutral data centers are presently classified as data centers with zero carbon emissions and a PUE of less than or equal to 1.2. This type of data center is often considered a part of the well-known category of green data centers, which by definition have a PUE level of less than 1.4. However, green data centers are not 100% carbon neutral, although both types of data centers source 100% renewable energy for operations. The market currently is driven mostly by government initiatives and policies which are in line with sustainable development and environmental protection. International climate accords and agreements such as the Paris Climate Agreement and Kigali Agreement are expected to have a significant impact in the growth of carbon neutral data centers. Apart from government policies, the growing demand for data storage and data processing due to the rise in data produced from various IT applications is another driver that is expected to have a significant impact on the market. The growth of Industry 4.0 and various digitization efforts globally has increased the demand for data centers, and this is going to have a positive impact on the carbon neutral data centers as well. ”

Key insights are drawn from in-depth interviews with the key opinion leaders of more than 40 data center operators and service providers, market participants, and vendors. The key players profiled in the report include 3M, ABB, Cisco, Eaton Corporation Inc., Dell Inc., IBM Corporation, Intel Corporation, Digital Realty, Equinix, Alibaba, Amazon AWS, Google LLC, HCL Technologies, Microsoft, and Fujitsu.

The study also offers strategic reasoning for growth that can help organizations in tracking various products, trends, and technologies that are changing the dynamics of the market. The recommendations by BIS Research also offer bespoke research services to help organizations meet their objectives, such as:

  • Data centers operators such as Digital Realty Trust, Equinix, Colt Technologies, and Verne Global
  • Data center component and hardware suppliers such as Dell Inc., HP, Intel, and IBM
  • Cloud service providers and hyperscale data center operations such as Google LLC., Apple, Facebook, Microsoft, and Amazon AWS
  • Data center cooling and power vendors such as 3M, Asparitas, ABB, and Eaton Corporation
  • Business organizations such as financial institutions, government agencies, manufacturing industries, and healthcare facilities

How can market intelligence on carbon neutral data centers market add value to an organization’s decision-making process?

  • Identify prominent indicators to adopt business growth strategies (such as M&A, partnerships, expansions, etc.) to grow in the carbon neutral data center market
  • Analyze market share and position through global and regional market sizes in the carbon neutral data center market and understand the global addressable market in the next five years
  • Identify the competitive strength of key players in the carbon neutral data center market based on the evaluation of their market coverage and market potential
  • Comprehend the deep-tech industrial applications that structurally needs to incorporate the carbon neutral data center market
  • Analyze how the role of carbon neutral data center differentiates the performance of the industrial applications as compared to traditional methods
  • Understand the government programs and initiatives landscape across different regions

Insightful Questions Covered to Enable Companies take Strategic Decisions

  • How will the data center market transition to green data centers and further into carbon neutral data centers? And what will be the factors and dynamics that shall dictate the transition?
  • What is the market definition and market trends that are leading the carbon neutral data center market?
  • What is the expected carbon neutral data center market size during the forecast period 2020-2025?
  • What are the expected future scenario and revenue generated by the different industries, data center types, and solutions?
  • What are the expected future scenario and revenue generated by different data center types such as hyperscale centers, enterprise, colocation data centers?
  • What are the expected future scenario and revenue generated by different solutions and subtypes such as hardware (server, cooling, power, storage, networking), software and platform, and support services?
  • What are the expected future scenario and revenue generated by the industry segments (IT &
  • Telecom, BFSI, Government, Healthcare, Manufacturing, Retail) for which carbon neutral data center services are offered?
  • Which region is the largest market for the global carbon neutral data center market?
  • What are the expected future scenario and revenue generated by different regions and countries such as North America, Europe, Asia-Pacific and Japan, China, the U.K., and Rest-of-the-World in the carbon neutral data center market?
  • What is the competitive strength of the key players in the carbon neutral data center market on the basis of the analysis of their recent developments, product offerings, and regional presence?
  • Where do the key carbon neutral data center companies lie in their competitive benchmarking compared to the factors of market coverage and market potential?
  • How are the adoption scenario, related opportunities, and challenges impacting the carbon neutral data center markets?
  • How is the government programs and initiatives landscape across different regions such as North America, Europe, Asia-Pacific and Japan, China, and Rest-of-the-World?
  • Which are the leading consortiums and associations in the carbon neutral data center market, and what is their role in the market?
  • What are the market dynamics of the carbon neutral data center market, and what is the impact of these dynamics in the market, including market drivers, restraints, and opportunities?
  • How does the value chain of the carbon neutral data center look like and which are the major segments?

Market Report Coverage - Carbon Neutral Data Center

Market Segmentation

  • Industry – IT and Telecom, BFSI, Government and Public Sector, Healthcare, Manufacturing, Retail, and Others
  • Data Center Types – Hyperscale Centers, Enterprise Type, Colocation Data Centers, and Others
  • Solution – Hardware (Servers, Cooling and Power, Storage, and Networking), Software and Platform, and Support Services
  • Region – North America, Europe, U.K., China, Asia-Pacific and Japan, and Rest-of-the-World

Regional Segmentation

  • North America – U.S., Canada, and Mexico
  • Europe –Norway, Finland, Sweden, Denmark, Iceland, Switzerland, Germany, France, Netherlands, and Rest-of-Europe
  • U.K.
  • China
  • Asia-Pacific Japan – Japan, South Korea, Singapore, and Rest-of-Asia-Pacific and Japan
  • Rest-of-the-World - Middle East and Africa, and South America

Market Growth Drivers

  • Government Regulations on Carbon Emissions and Rising Emphasis on Renewable Energy
  • Growing Energy Efficient Alternatives for Data Center Cooling
  • Sustainable Development Efforts and CSR Activities
  • Rising Electricity Tariffs Globally

Market Growth Restraints

  • High Dependence on Non-Renewable Energy for Running Data Center Operations
  • Higher Costs of Implementation and Compatibility Issues

Market Opportunities

  • Increasing Research and Development in Energy Storage Technologies
  • Increased Demand for Data Centers and Mega Data Centers
  • Transition from Onsite Storage Facility Toward Cloud Connectivity

Key Carbon Neutral Data Center Companies Profiled

3M Company, ABB Group, Cisco Systems Inc., Eaton Corporation plc., Dell Inc., IBM Corporation, Intel Corporation, Digital Realty Trust Inc., Equinix, Alibaba Group, Amazon.com Inc, Alphabet Inc., Microsoft Corporation, Fujitsu Ltd., Hewlett Packard Enterprise (HPE)

Key Questions Answered in this Report:

  • How will the data center market transition to green data centers and further into carbon neutral data centers? And what will be the factors and dynamics that shall dictate the transition?
  • What is the market definition and market trends that are leading the carbon neutral data center market?
  • What is the expected carbon neutral data center market size during the forecast period 2020-2025?
  • What are the expected future scenario and revenue generated by the different industries, data center types, and solutions?
  • What are the expected future scenario and revenue generated by different data center types such as hyperscale centers, enterprise, colocation data centers?
  • What are the expected future scenario and revenue generated by different solutions and subtypes such as hardware (server, cooling, power, storage, networking), software and platform, and support services?
  • What are the expected future scenario and revenue generated by the industry segments (IT &
  • Telecom, BFSI, Government, Healthcare, Manufacturing, Retail) for which carbon neutral data center services are offered?
  • Which region is the largest market for the global carbon neutral data center market?
  • What are the expected future scenario and revenue generated by different regions and countries such as North America, Europe, Asia-Pacific and Japan, China, the U.K., and Rest-of-the-World in the carbon neutral data center market?
  • What is the competitive strength of the key players in the carbon neutral data center market on the basis of the analysis of their recent developments, product offerings, and regional presence?
  • Where do the key carbon neutral data center companies lie in their competitive benchmarking compared to the factors of market coverage and market potential?
  • How are the adoption scenario, related opportunities, and challenges impacting the carbon neutral data center markets?
  • How is the government programs and initiatives landscape across different regions such as North America, Europe, Asia-Pacific and Japan, China, and Rest-of-the-World?
  • Which are the leading consortiums and associations in the carbon neutral data center market, and what is their role in the market?
  • What are the market dynamics of the carbon neutral data center market, and what is the impact of these dynamics in the market, including market drivers, restraints, and opportunities?
  • How does the value chain of the carbon neutral data center look like and which are the major segments?

Market Overview

The carbon neutral data center market is projected to grow from $3.46 billion in 2020 to $9.42 billion by 2025, at a CAGR of 22.17% from 2020 to 2025. The growth in the carbon neutral data center market is expected to be driven by various government policies and environmental regulations especially which are aligned to reducing carbon emissions, for example, the International Climate Agreement. Apart from this, the ongoing trend of Industry 4.0 and digital transformation, which has increased the amount of data being produced due to the data intensive nature of the applications, has significantly impacted the market.

The carbon neutral data center market by industry has the largest share in the IT and telecom industry, followed by the BFSI industry. The IT and telecom industry or the ICT industry is a data-driven industry. Almost all the applications are data intensive and generate a huge amount of data in the entire value chain. The telecom industry is dependent upon data centers as data transmission during internet services requires constant storage and processing, which is a primary criterion for quality services. Thus, in order to maintain quality, the industry has to rely on data center facilities.

The hyperscale data centers have the highest potential in the carbon neutral data center market by data center type. It is expected to be the most impacted type as most of the hyperscale operators and service providers such as Google and Microsoft have pledged to achieve carbon neutrality in their entire value chain by 2030. The companies have shown that lower PUE levels are possible to achieve with the use of efficient technologies utilizing renewable energy in the entirety of data center operations. Apart from this, the ongoing trend of cloud migration has also helped the market for hyperscale data center types. The colocation type data center is accounted for the second-largest share in the market. The ongoing trend of digitization and the development of various technologies such as extended reality, internet of things (IoT), artificial intelligence (AI), and other enabling technologies have helped many start-ups to grow. These start-ups do not have much financial support to own and operate a data center that supports their operations. This is where the colocation data centers become a solution for the needs of various smaller organizations with data center demands.

The hardware segment has the highest share among other solutions and is expected to remain the largest contributor in the market (by carbon neutral solution). Every data center has a set of hardware equipment and devices which form the basis of data center operations. These include servers, power and cooling equipment, storage, and networking devices. All these devices are crucial for a data center. Among these devices, servers consume almost half of the total power consumed by the data centers, followed by the cooling and power equipment. During the forecast period, the power consumed by the cooling and power segment is expected to reduce due to the increase in demand for efficient cooling systems.

Impact of COVID-19 on Carbon Neutral Data Center Market

COVID-19 has restricted the growth of almost every industry globally owing to the measures such as lockdown and travel restrictions undertaken by the governments. Due to this, the entire supply chain of the data center industry has been negatively affected. This has restricted the flow of various equipment and devices, which are essential for data center operations, due to which many data centers were not able to get commissioned, and many projects were stalled. The lockdown also restricted people from traveling, which disallowed many data center architects and engineers to reach onsite for the construction of new facilities and maintenance of existing facilities. The server utilization rate was also affected due to the halt in various computing activities in almost every industry. Many operators have reported that almost half of the servers were online during the pandemic. However, industries such as telecom, which is the largest consumer of data center, operated in their fullest capacity and thus maintained the demand for data transmission and transfer services. This has also helped the industry to maintain a minimum operational return from the online services.

Competitive Landscape

The competitive landscape for the carbon neutral data market demonstrates an inclination toward companies adopting strategies such as business expansions, product launch and development and partnerships, collaborations, and joint ventures. Among all the strategies adopted, partnerships and collaboration business expansions have been the most prominent strategy adopted by the key players in the market. In July 2020, Microsoft announced that it had successfully used hydrogen fuel cells to power a data center for two consecutive days.

The market players also focused on partnerships, collaborations, and joint ventures. In August 2020, Equinix, which is among the largest data center operators globally, announced a strategic partnership with Google, a cloud service provider. The agreement between the companies enables enterprises utilizing Equinix services to more easily connect and migrate priority workloads to Google Cloud.

Regional Market Dynamics

The carbon neutral data center market holds a prominent share in various countries of North America, Europe, and Asia-Pacific and Japan. Europe is estimated to generate the highest revenue in 2020. This is largely attributed to the market friendliness and positive outlook of consumers toward the carbon neutral initiative supported by government policies and various environmental regulations, which are influencing the market positively. Europe also has some of the coldest regions in the world, especially the Nordic countries such as Sweden, Norway, Finland, Denmark, and Iceland. These countries offer a very environment-friendly solution to the data center industry due to the colder climate. Apart from this, these countries also have very high renewable energy production in the region, which also helps the market for carbon neutral data centers to grow. The naturally cold climate in the region allows the operators to utilize naturally cold air and water to be utilized for cooling operations, reducing the need for cooling systems and decreasing energy consumption in data centers.

Asia-Pacific and Japan, in 2019, held a smaller market share compared to North America and Europe. The market is highly cost-sensitive, which has restricted the adoption of various energy-efficient technologies; however, the market shows a huge potential during the forecast period due to ongoing economic developments aligned with sustainable development. Countries such as Japan and South Korea are already leading the region in market penetration and adoption of green technologies. Other developing countries, such as India and the ASEAN countries, have a huge potential to become important markets for carbon neutral data centers.

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