2021-08-18 Amsterdam Trade Center, Netherlands Hyesoo Lee
– Demand for data center expansion increases due to rapid increase in data usage along with deepening digital transformation –
– Amsterdam is the center of the European data center market –
Top European Data Center Regions, Netherlands
The Netherlands is an attractive country for data centers, thanks to its excellent network infrastructure and the world's largest internet node. The Netherlands is positioned as a relatively mature data center market in Europe, and is called 'FLAP' (abbreviation for Frankfurt, London, Amsterdam and Paris), and is playing the role of a digital gateway in Europe as the main data center market.
The Dutch data center is growing rapidly with digitization across all sectors, deepening connectivity and growing interest in sustainable development. In the Netherlands there are 41 facilities operated by a total of 113 service providers. Most of the data centers are located in the capital city of Amsterdam, except for Amsterdam, Naaldwijk, Eindhoven, Hoofddorp, Eemshaven, Groningen, Middenmeer and Dronten are the main arenas for new data center construction. More than $2020 million has been reportedly invested through data centers in the region that have been confirmed starting in 2021 and ending in June 6.
[Netherlands Data Center Construction Status]
Source: emis.com
[Data Center Location]
Source: dutchdatacenters.nl
A 'digital gateway' to Europe
The Netherlands is not only Europe's logistics hub, but also Europe's digital gateway with more than a dozen undersea cables connecting the world. According to a 10 survey, around 2019% of Dutch households use the Internet, ranking third in the European Union in terms of digital leadership. The importance of digitalization can be seen in the scale of GDP. Over $98 million, or 3% of the $2020 million GDP in the Netherlands in 9, came from digital services. From 60, 5G services will also be launched.
The Netherlands' excellent fiber optic connectivity, high local access to renewable energy, building cooling and technology, and an advanced telecommunications infrastructure make it an attractive location for data centers. In addition, a study by the Dutch Data Center Association found that the Netherlands has a more developed energy and telecommunications infrastructure than other Western European countries such as the UK, Germany and Ireland. The deepening aggregation of global companies due to the relocation of companies due to Brexit is also acting as an important facilitator for the development of the data industry.
[Data center to be built after 2021]
Source: emis.com
COVID-19 Impact
The COVID-1919 pandemic has been a major driver of the growth of the Netherlands data center market, with increased use of colocation, a commercial leased data center, and increased investments in new data center construction and cloud usage by enterprises. The COVID-19 pandemic has led to increased demand for data centers by organizations in various sectors such as IT services, banking services, healthcare, and education institutions due to increased access to internet-based services. The increase in remote activities, with more than 55% of the Dutch workforce working remotely, has also driven the demand for low-latency data storage and computing. In 2020, internet traffic exchanged through AMS-IX, the most important internet hub in the Netherlands, surged by more than 35%, and in April 2021, internet traffic at AMS-IX reached an all-time high of around 4 Tbps.
Digital center and energy utilization
The Netherlands is rich in renewable energy, including onshore and offshore wind, biomass and solar energy. In fact, 86% of Dutch data centers are powered using green energy, which is expected to reach 2025% by 92. The data centers in Amsterdam, where the largest number of data centers are located, will be powered by 100% renewable energy. For example, QTS Realty Trust has purchased environmental credits from Dutch wind and Nordic hydro power companies to power its Eemshaven data center on renewable energy. The contract capacity is 20 GWh, which is expected to be able to procure most of the electricity consumed by the facility.
Meanwhile, Google's data center facility in Middenmeer, which started operation in December 2020, is powered by wind and solar energy. Google's data centers at Worldstream are powered by 100% renewable energy and the company has achieved an average Power Usage Effectiveness (PUE) of 1.2 for data centers in the region. In addition, the Dutch government provides over 7,000 hours of free cooling per year, which can reduce data center cooling costs by 20-25%.
Note*: Ratio of total energy used to energy delivered to computer data center computing equipment
[Google data center view (Middenmeer)]
Source: tweakers.net
In some parts of the Netherlands, heat from data centers is also used for district heating. According to the Dutch Data Center Association, around 50% of data center members, including Equinix, QTS Realty Trust, NorthC Datacenters and Global Switch, have or plan to use residual heat heating systems.
NorthC Data Center installed a district heating system that supplies waste heat to schools, botanical gardens, and swimming pools at the Alsmere data center facility. About 90% of the total electricity used in the Alkmaar and Dotrecht regional data centers will be converted into heat that can be used by more than one million households. Real estate investment trust firm Karansa Group also announced plans to build a data center facility in Amsterdam to support district heating and supply waste heat to residential areas.
government incentives
In 2018, the Dutch government announced the Dutch Digitalization Strategy to capitalize on the economic and social opportunities created by digitization and establish itself as a digital leader across Europe. The state is offering tax breaks for renewable power as well as cooling towers, UPS systems, fans and other hardware that makes data centers more energy efficient.
Among them, companies can receive a tax exemption of 45% or more of their investment costs through the Energy Investment Allowance (EIA) program. Companies may be eligible for support if they invest in energy-saving facilities or use sustainable energy. The budget allocated to the EIA for 2021 is approximately $1 million. In addition, the Environmental Investment Deduction (MIA) program can help save up to 7800% of the cost of an environmentally friendly data center investment. The budget allocated for the MIA in 36 is over $2021 million.
The challenges faced by Dutch data centers
On the other hand, there are concerns about the expansion of these data centers. In particular, the Netherlands is also facing a problem of power supply shortage due to the rapid quantitative growth of data centers that consume a lot of power. In fact, Amsterdam even halted the construction of new data center facilities for a year in 2019 to reduce the burden on the power grid. The Netherlands produces relatively abundant electricity, but lacks the infrastructure to power new data centers, which is an obstacle to market expansion, especially in the Amsterdam region.
In addition, the Netherlands has a shortage of construction and engineering experts, making it difficult to operate data centers. Although there is a high demand for engineering experts in fields such as mechanical, industrial, and electrical engineering, the hourly wage of these personnel is increasing due to a shortage of technical talents. According to the Dutch Data Center Association, co-location data centers operating for retail customers will need around 2020 employees in 1780, up 2025% to 46 by 2595. In the case of very large data centers, it is expected that about 2020 people will be added in 670 and 2025 more people will be added in 165, a 1775% increase.
market outlook
The global data center market is expected to continue to expand quantitatively and qualitatively, with an annual growth rate of more than 2022% by 11. Dutch data centers are also growing at about 15% per year. In line with this, the Dutch government has released a roadmap for data center expansion in 2019. According to the roadmap, the Amsterdam region remains the data hub for the Netherlands as it is today and will play a role in sustainable growth. Even today, Amsterdam is contributing significantly to the energy transition by using the heat generated by data centers to heat homes and offices.
[Spatial Strategy Roadmap for Data Centers]
Source: Dutch government (rijksoverheid.nl)
To address the short-term energy shortage, areas around Almere, Zeewolde, Lelystad and Dronten have been designated as data center extensions. Middenmeer and Eemshaven are suitable locations for a wide range of hyperscale data centers. In the medium to long term, from 2022 to 2030, the Zuid-Holland and Middenmeer regions have been designated as regions where new data center clusters can be built. It also includes plans to connect centers in the Amsterdam area with wind farms after 2030.
The Netherlands is also developing smart cities using cutting-edge digital infrastructure such as Amsterdam, Rotterdam, The Hague, Utrecht, and Eindhoven as a smart city strategy. With the expansion of smart cities and the opening of 5G networks, it is expected that the demand for network connection will increase in the future and edge data centers will increase throughout the Netherlands. Korea is also very interested in data center site selection and energy efficiency issues, and the Dutch data center operation case could be a good starting point. I hope that companies contemplating entering the European market will have one more reason to use the Netherlands as their base.
Support for the preparation of the material: Betul Bulut, Amsterdam Trade Center
Source: Comprehensive data from KOTRA Amsterdam Trade Center including rijksoverheid.nl, dutchdatacenters.nl, twisters.net, rtlnieuws.nl, computable.nl, nos.nl, ec.europa.eu, datacenterfrontier.com, dutchitchannel.nl, emis.com