European Data Center Trends

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We recently got the chance to sit down once again with Peter Jones, Chief Development Officer and founder at Yondr, and get his thoughts on the European data center industry.

A Little Bit About Yondr and Pete
For those unfamiliar, Yondr is a privately owned network provisioning company that offers modular data center designs: MicroBloc, MetroBloc, and HyperBloc. On one end of the spectrum is hyperscale, in the 10s to 100s of megawatts range. On the other end of the spectrum, tailored small scale deployments that help people enter new markets. Sometimes the small scale deployments are in places that have no colocation presence whatsoever. Yondr’s presence spans over three continents, employing over 300 people and still hiring as quickly as possible.

Peter started off as an electrical engineer on the design side, before transitioning into delivery management for Digital-Realty during their big EU expansion from 2009 to 2011. From 2011 to 2018 he was part of Google’s global infrastructure team, taking a year off in the middle to skipper a sailing yacht from the UK to New Zealand.

In 4Q of 2018, he started Yondr with Dave Newitt and Miles Redding. They predicted an unprecedented level of network growth by the turn of the decade… but had no idea how much the pandemic would accelerate that need at a global level. 2021 has been a transformational year, with Yondr’s headcount constantly on the rise, and client demands ramping up in both frequency and scope.

Power Pricing and Availability in Europe
David asked for an update on the price of power in certain parts of the EU, and how that’s driving and shaping growth?

Peter said that all of the ‘easy’ sites are gone. That’s being reflected in both longer lead times and higher long term cost projections. But the energy sector’s price shocks in Europe centered around resources like natural gas, didn’t help matters at all.

The conversation shifted quickly to the renewables appetite within the sector. The logic is that if your fixed price power purchase agreement can be ‘normalized’, avoiding the turbulence of these market shocks, you can plan deep into the future without fear. One of the best ways for a provider to ensure that they can fulfill a fixed price agreement is to get a fixed rate agreement from a renewable provider. Then there’s no need to eat price hikes or to pass them on to clients.

Europe and Asia/Pacific Trend Predictions
Transaction volume and investment liquidity are on the rise in both Europe and the Asia/Pacific region, a trend that’s unlikely to reverse any time soon. The main prediction is that the paperwork and logistics side of things will be streamlined, leading to more readily available funds and shorter lead times. The competency level for these big deals will help the sector as a whole move with confidence when there’s a clear opportunity.

There’s got to be an alternative to Singapore, given their data center construction moratorium. India is a possibility. A third of Yondr’s activity in Asia will come out of India in 2022. They’re breaking ground for 60 megawatts in Mumbai, as an example.

In Europe, around a dozen small scale, careful moves to the east are in the works. That should establish quite a few footholds… or cautionary tales, depending.

2022 in the Middle East will see true markets reveal themselves. At some point, someone is going to have to make a big bet, and when they do others will follow. It will depend on risk appetite, but it’s likely to happen in the next year.

Unfortunately, from a statistical perspective, some of the riskier projects that have been underway since before the start of Covid will fail to deliver. These things have not gotten easier to build. Project management experience in the industry is already spread very thin. And there are immense supply chain challenges. It would be naive to think that all of the new players and new investors that have established themselves in the past couple of years are going to stick around.

Peter is also looking forward to seeing which of the buzzword small scale use cases will start to pan out in 2022. Edge is of course still popular, but its effectiveness is highly subjective and each use case fairly unique. As to the rest, ranging from 5G, to self-driving cars, to IoT, we’ll need to see how long those will take to establish significant footprints throughout the world.

For more information about what Yondr is doing in 2022 and beyond, check out their website.