Data centre generator market to surpass £1.6bn by 2032

Author: Simon Rowley

According to a recent study by Global Market Insights, the data centre generator market is set to grow from its current market value of more than $1.1 billion (£770m) to over $2.1 billion (£1.62bn) by 2032.

The data centre generator market has emerged as a critical component in ensuring uninterrupted operations and business continuity for organisations. With the ever-increasing reliance on digital services and cloud computing, data hubs have become the backbone of modern-day enterprises. However, the vulnerability of these facilities to power outages has necessitated the deployment of reliable backup power solutions, primarily in the form of generators.

Data centres are massive facilities that house thousands of servers, storage systems, and networking equipment, all of which consume substantial amounts of electricity. According to the IEA, internet traffic has increased by around 2400% since 2010 worldwide, and data centres now account for over 1% of global power consumption.

Any disruption in the power supply, even for a brief period, can lead to data loss, system failures, and significant financial losses. To mitigate these risks, data centre operators deploy generators as a failsafe measure, ensuring continuous power supply and seamless operations.

Global Markets Insights (GMI) is reporting that the data centre generator industry size will expand at over 7.5% CAGR through the forecast period 2024-2032, as digital transformation accelerates and data consumption surges.

The digital age has ushered in an unprecedented surge in data creation and utilisation, fuelling the expansion of data centre networks. Housing thousands of servers and storage systems, these facilities are the backbone of the modern internet and cloud computing infrastructure.

Power outages have become an increasingly frequent occurrence across the globe, posing significant challenges for data centres that rely on uninterrupted power supply. These power cuts can be attributed to different factors. According to Climate Central, the US registered twice as many weather-related power outages through 2014-2023 as compared to the decade before.

In August 2022, a widespread power outage in California left thousands of residents and businesses without electricity, including several data centres in the Silicon Valley region. The outage, caused by a faulty substation, lasted for several hours, disrupting operations, and highlighting the vulnerability of data centres to such events.

These instances underscore the critical importance of reliable backup power systems, such as generators. The frequency of power outages continues to rise with aging infrastructure and extreme weather events. Data centres must prioritise resilient and redundant power solutions to maintain uninterrupted operations and minimise the risk of costly downtime. GMI reports that the North American region held more than 35% share of the data centre generator market during 2023, asserting the strong focus of operators to counter power loss scenarios.

Environmental concerns, regulatory changes, and the need for higher efficiency is reinforcing the data centre generator market. Manufacturers are investing in research and development to introduce innovative solutions that cater to the evolving needs of the industry.

One of the key areas of focus is the exploration of alternative fuel sources. While diesel generators have been the traditional choice, there is a growing interest in natural gas and renewable energy sources like biogas and hydrogen. Alternative fuels offer lower emissions and potentially lower operational costs, making them an attractive option for eco-conscious data centres.

Below are a few recent examples that demonstrate how green initiatives are paving the way for low-emission data centre operations:

• Vantage Data Centers had recently announced plans to expand the use of hydrotreated vegetable oil (HVO), a renewable and sustainable alternative to diesel fuel, in its generators across several of its largest markets in both North America and EMEA. In comparison to conventional diesel, HVO use can cut down carbon emissions by 65% to 90%.
• Last year, UK data centre operator, DataVita, adopted HVO as the fuel choice for backup generators at its new facility in Glasgow, Scotland. DataVita, which currently operates the 4,000 square-metre Fortis data centre outside Glasgow, has embraced HVO amid wider corporate commitments to sustainability.
• During November 2023, Hitachi Energy had introduced the HyFlex demonstration unit, a groundbreaking Hydrogen Power Generator set in Gothenburg, Sweden. Developed in collaboration with PowerCell Group, this emission-free generator can address the need for sustainable and reliable power sources in locations without practical access to the power grid and where diesel generators are infeasible.

Integrating digital technologies can transform the way generators are monitored and controlled. Sophisticated control systems, remote monitoring capabilities, and predictive maintenance solutions are enhancing operational efficiency, reducing downtime, and extending the lifespan of generator sets.

Manufacturers are also exploring modular and scalable generator designs to better accommodate data centre operations. These flexible solutions allow for easy capacity expansion or contraction, ensuring that power generation aligns with the evolving needs of the facility.

The global data centre generator industry is dominated by a few major players that offer a diverse range of products and services, including Cummins, Caterpillar, General Power Systems, Kohler, Rolls-Royce Power Systems, ABB, and Doosan, among others. These companies have established themselves as industry leaders through their technological innovations, extensive geographic footprints, and commitment to meeting the evolving needs of data centre operators.

Key opportunities to transform the data centre generators market

• Hybrid and micro-grid solutions: The development of hybrid power systems, combining generators with energy storage solutions like batteries or fuel cells, offers improved efficiency and resilience. Micro-grid solutions to integrate multiple energy sources can provide enhanced reliability and flexibility for data centres.

• Emerging markets: The rapid digitalisation and increasing data consumption in emerging economies across Asia-Pacific and Latin America present significant growth opportunities for data centre generator manufacturers. These regions offer untapped potential for market expansion and the deployment of advanced power backup solutions.

• Edge computing and distributed data centres: The rise of edge computing and distributed data centres, which bring computing resources closer to end-users, creates a demand for smaller, more efficient, and decentralised generator systems tailored to these localised infrastructures.

Looking ahead, the proliferation of cloud computing, the Internet of Things (IoT), and the rise of emerging technologies like AI and machine learning will dominate data centre applications. The advent of 5G networks and edge computing is expected to accelerate data centre growth and energy consumption. With the promise of ultra-low latency and high-speed connectivity, these innovations will enable new applications and services that will generate even more data and place greater demands on data centre resources.

As the world becomes increasingly digitised, the data centre generator market will play a crucial role in ensuring the continuity of essential services and minimising the impact of power outages on businesses and individuals. Players in this market will need to stay ahead of the curve by investing in research and development, adopting innovative technologies, and fostering collaborations to address the evolving needs of the data centre industry.

For more, access the full report from Global Market Insights by clicking here.