Cloud Computing's Impact on European Data Center Adoption [CASE STUDY]

June 24, 2024

The digital landscape in Europe is undergoing a significant transformation, driven by the widespread adoption of cloud computing. This shift is not only changing how businesses operate but also catalyzing the growth and evolution of data centers across the continent. This article delves into the interplay between cloud computing and data center expansion in Europe, highlighting key market trends, technological advancements, and the strategic imperatives for stakeholders. 


Cloud Computing: The Catalyst for Data Center Growth 

Cloud computing offers scalable, flexible, and cost-effective solutions that enhance operational efficiency. As businesses increasingly migrate their operations to the cloud, the demand for robust data center infrastructure capable of supporting complex and voluminous workloads has surged. The European Data Center Market is expected to reach 12.23 thousand MW in 2024 and grow at a CAGR of 7.96% to 17.93 thousand MW by 2029. 


Market Dynamics and Growth Drivers 

The expansion of data centers in Europe is driven by several key factors: 

  1. Rising IT Load Capacities: The need for higher IT load capacities is growing as businesses expand their digital operations. 

  1. Colocation Services: The rise of colocation services allows companies to rent space for servers and other computing hardware, facilitating easier scalability. 

  1. Geographic Expansion: Investments are concentrated in major European hubs like Frankfurt, London, Amsterdam, Paris, and Dublin, known for their advanced digital infrastructure and connectivity. 


Key Market Trends 

The European data center market is characterized by several important trends: 

  1. Increasing Usage of OTT Subscriptions and Mobile Gaming: The proliferation of over-the-top (OTT) services and mobile gaming is driving up data traffic, necessitating more data storage and processing capabilities. By 2025, smartphones are expected to account for nearly 85% of connections in Europe. 

  1. Adoption of 5G Networks: Over two-thirds of regional operators have established 5G networks, with commercial 5G services implemented in most European countries. This advancement significantly enhances data transmission speeds and supports the increased data demands of modern applications. 

  1. Growth in Tier 3 Data Centers: Tier 3 data centers dominate the market due to their balance of cost-efficiency and reliability. These centers offer high redundancy levels and multiple power and cooling paths, ensuring uptime of around 99.982% (equivalent to 1.6 hours of downtime per year). The United Kingdom, France, Germany, and Ireland host a significant number of Tier 3 data centers. 

  1. AI and Advanced Technologies: The integration of artificial intelligence (AI) and machine learning into data center operations is optimizing performance and efficiency. AI-driven analytics enhance predictive maintenance, resource management, and security protocols, making data centers more resilient and adaptive to changing demands. 


Technological and Infrastructure Developments 

The data center industry in Europe is witnessing several technological advancements: 

  1. Energy Efficiency: Innovations in energy management, including the use of renewable energy sources and advanced cooling systems, are critical for reducing operational costs and minimizing environmental impact. 

  1. Enhanced Connectivity: The deployment of extensive fiber optic networks and submarine cables ensures high-speed, reliable data transmission across regions, supporting the needs of cloud services. 


Future Outlook: Pioneering the Next Frontier in Data Centers and Cloud Computing 

The future of data centers and cloud computing in Europe is poised for dynamic changes, driven by the integration of edge computing, the expansion of green data centers, the deployment of AI and machine learning, and the influence of 5G and future networking technologies. Innovations like blockchain are expected to enhance security and efficiency, while regulatory changes will shape operational standards. Continued investments are anticipated in digital infrastructure to meet the growing demands of sophisticated technologies and applications. 


The Impact of Cloud Computing on Data Facility Footprints 

As cloud computing continues to evolve, it significantly impacts the configuration and utilization of data centers. Over the past year, there has been a marked increase in the average power density per rack within these facilities. Historically, data centers averaged about 2 kW per rack. This figure has now risen to an average of 5 kW per rack, with projections suggesting a further increase to 8-10 kW soon. This trend indicates not only a growth in power consumption but also an escalation in the processing capabilities housed within each rack. 

This surge in power density reflects a broader shift in how businesses are utilizing data center spaces. Smaller-sized colocation deployments, which traditionally involved renting space within a data center to host private servers, are increasingly migrating to public cloud services. This transition is driven by the public cloud's ability to offer scalable, flexible, and cost-effective computing resources without the need for physical hardware management. 

Conversely, businesses with larger operational needs are moving towards Infrastructure as a Service (IaaS) solutions and private deployments within retail colocation centers. This shift is influenced by the need for greater control over data and more robust data security measures, which are critical for organizations handling sensitive or mission-critical information. Such companies often require tailored infrastructure that meets specific regulatory compliance and security standards, which can be more effectively managed through IaaS or private colocation arrangements. 


These changes in the data center landscape are indicative of the evolving demands of modern enterprises, where flexibility in scaling, security, and power capacity are paramount. As cloud technologies continue to advance, data centers are compelled to adapt swiftly to accommodate these increasing and changing demands, ensuring they can support the high power and infrastructure requirements of contemporary data processing and storage needs. 

Increased Power Density and Footprint Changes 

  1. Advanced Cooling Technologies: With the increase in power density per rack—from 2 kW to 5-8 kW—comes the need for more advanced cooling solutions to manage heat output. Data centers are now adopting technologies such as liquid cooling and containment systems, which are more efficient than traditional air-cooled systems, especially in high-density setups. For instance, Google has been experimenting with liquid cooling to manage the heat from their latest AI processors, which are densely packed and generate substantial heat. 

  1. Modular Data Centers: Companies are increasingly turning to modular data centers to quickly scale up their capacity in line with the growth in power densities. These pre-fabricated units can be deployed rapidly and are often equipped with integrated power and cooling solutions, tailored to support higher power usages. Microsoft’s deployment of underwater data centers is an example of innovative modular data centers that leverage natural cooling properties and can be replicated efficiently. 

  1. Energy Efficiency Measures: Higher power densities have necessitated the adoption of energy-efficient practices to control operational costs and reduce environmental impact. Techniques like using renewable energy sources, deploying energy-efficient UPS systems, and advanced power monitoring systems are becoming commonplace. Facebook’s data centers, for example, are designed to be powered by 100% renewable energy, reflecting a trend towards sustainability amidst increasing power requirements. 

Case Studies Illustrating Industry Adaptations 

A major European financial services firm transitioned from traditional colocation to IaaS solutions to better manage larger data volumes and ensure compliance with stringent regulations. This move allowed for flexible scaling, reduced physical footprint, and enhanced disaster recovery capabilities. 

Case Study 1: Financial Services Firm Transitioning to IaaS 

A major European financial services firm transitioned from traditional colocation to IaaS solutions to better manage larger data volumes and ensure compliance with stringent regulations. This move allowed for flexible scaling, reduced physical footprint, and enhanced disaster recovery capabilities. 

Case Study 2: Retail Chain's Shift to Public Cloud 

A European retail chain moved its smaller colocation deployments to public cloud services to support its growing e-commerce operations. This shift facilitated rapid deployment of new digital services and utilization of advanced data analytics and machine learning to improve customer experiences. 

Case Study 3: Tech Company Enhancing Power Density 

An international tech company specializing in digital media upgraded its data centers across Europe to support 10 kW per rack, incorporating cutting-edge cooling technologies to manage the increased heat output and maintain efficiency. 

Case Study 4: Smart Energy Management by a Cloud Provider 

A leading cloud service provider in Germany implemented a smart energy management system in its data centers, which included AI-driven algorithms to predict and manage energy usage effectively. This system adjusts cooling and power supply dynamically, based on real-time data center activities and external weather conditions, optimizing energy consumption. As a result, the data center has reported a 15% reduction in energy usage, translating into significant cost savings and a lower carbon footprint. 

Case Study 5: Use of Renewable Energy in Scandinavian Data Centers 

Data centers in Scandinavia are leveraging the region’s abundant renewable energy resources, such as hydroelectric, wind, and geothermal energy. A notable example is a data center in Sweden that operates entirely on electricity generated from hydroelectric power. This not only ensures a near-zero carbon footprint but also helps the data center achieve energy costs among the lowest globally, providing a competitive edge in attracting international clients looking for sustainable hosting solutions. 

Case Study 6: Retrofitting for Higher Efficiency in an Established Data Center 

An established data center in London undertook a significant retrofitting project to accommodate higher power densities while enhancing energy efficiency. This project included upgrading the cooling infrastructure to use indirect adiabatic cooling technology, which uses outside air to cool the facility, dramatically reducing the need for refrigeration. The data center also installed LED lighting and upgraded to energy-efficient power systems. Post-retrofit, the facility reported a 20% improvement in power usage effectiveness (PUE), demonstrating how older data centers can adapt to modern demands without entirely rebuilding their infrastructure. 


Competitive Landscape 

The European data center market is fragmented, with significant players such as Digital Realty Trust, Equinix ,, Global Switch and CyrusOne leading the industry. The Dutch data center market is more diverse, with operators such as Data Facilities Data Centers leading growth and innovation to Tier2 markets in the near vicinity of Amsterdam  



The symbiotic relationship between cloud computing and data center expansion is reshaping Europe's digital infrastructure. As cloud technologies evolve, data centers must continually adapt to meet the growing demands for connectivity, speed, and scalability. This dynamic interplay is paving the way for a new era of digital transformation, crucial for the continent's economic growth and technological advancement.