Market Trends of Middle East Data Center Power Industry
IT and Telecom to Hold Significant Share
- Telecom providers are primarily responsible for driving content delivery and facilitating mobile and cloud services, which is why telecom data centers require high connectivity. This specific type of data center is connected to other data centers, cloud providers, and telecom operators through outside plant (OSP) cables, with cross-connects extensively deployed to ensure efficient operations.
- While most traditional data centers use alternating current (AC) power distribution systems, telecom data centers run on direct current (DC) power. Adding more battery strings allows DC power systems to easily be built and expanded over time as the load increases. Since telecom data centers manage network resources, such as vRAN and 5G packet core, the increasing load is expected to increase with major 5G deployment.
- Telecom suppliers are encouraged to invest in data center businesses due to the increasing adoption of 4G and the impending 5G wave. According to the Telecommunications Regulatory Authority, in the United Arab Emirates, there were about 18.7 million active mobile phone subscribers as of March 2022. This figure reflected a slight rise from December 2020.
- Saudi Arabia's 5G users achieved the fastest 5G peak download speed globally, outpacing South Korea's performance by 11%, at 862.6 Mbps. Once 5,358 new towers are built, there will be 12,302 5G towers nationwide by the end of the year. This number is anticipated to increase as more spectrum is available for commercial use and more people desire quicker internet services.
- The data center power industry is gaining traction due to investments from cloud service providers such as Google and Oracle. For Saudi Vision 2030, Oracle, in partnership with NEOM Tech & Digital Hold Co., will be the first tenant in the hyperscale data center at NEOM. Oracle Cloud Infrastructure (OCI) would be housed in the data center, providing a high-performing, resilient platform for cloud services. Such factors are expected to lead to major demand for power solutions during the forecast period.
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UAE to Register Significant Growth
- The major growth drivers for the UAE data center power market include increasing demand for cloud storage and an increasing amount of data around the United Arab Emirates. At the start of 2022, the internet penetration rate in the United Arab Emirates was 99.0% of the total population. The country ranks sixth in terms of digital banking adoption.
- Australian financial comparison website Finder states that the number of UAE residents using digital banking will increase by 22% by the end of 2027. Digital bank account adoption reached 34% in 2023. The increase in data center construction is expected to augment digital banking.
- The use of DCIM/BMS software reduces power consumption and decreases carbon emissions, resulting in significant savings in data center OPEX and reducing human intrusions to handle critical tasks. Therefore, the usage of DCIM/BMS software is rising in the country.
- Increasing IT load capacity is a major factor affecting the demand for power solutions. Khazna Data Centre announced plans in January 2021 to increase its IT load capacity from 40 MW to 200 MW by 2023. The plan calls for expanding the company's three existing data centers in Abu Dhabi and Dubai. Etisalat and du, two national telcos, are also expanding their data storage and transmission capabilities. du opened two data centers recently, one in Dubai Silicon Oasis and one in Abu Dhabi's Khalifa Industrial Zone.
- The United Arab Emirates is also looking into cleaner energy sources to power data centers to reduce environmental impact and carbon emissions. Moro Hub in the United Arab Emirates signed an agreement with Chinese tech giant Huawei in May 2021 to build a 100 MW, uptime tier 3-certified solar-powered data center in the Mohammed bin Rashid Al Maktoum Solar Park.
- In terms of partnerships, Equinix partnered with various organizations to develop and demonstrate low-environmental-impact fuel cells that provide economic and resilient prime power solutions for data centers. The project will integrate solid-oxide fuel cells (SOFC) with uninterruptible power supply (UPS) technology and lithium-ion batteries to provide resilient and clean primary power for data center deployments and other critical infrastructure.
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