Data Centre Cost Index positive despite a post-pandemic global supply chain crisis

Date: 2022-02-01
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According to Global consultancy Turner & Townsend’s latest Data Centre Cost Index, the construction sector is in the midst of an international supply chain crisis as it continues to recover from the impact of Covid-19. Despite this adversity, 70% of this year’s survey respondents were optimistic that stronger-than-ever demand proves that the data-center industry is recession-proof.

The Index-which is in its fifth year, looked at global markets consisting of 44 locations including Nairobi and Johannesburg in Africa. Finding according to a statement released recently show that increasing costs in every market due to years of supply disruption, did not deter data center demand in most markets. The demand, the statement said remained relatively steady when compared to other comparable industries.

Wendy Cerutti, Turner & Townsend’s data center lead for Africa said, “Market growth for data centers has been exponential over the past five years and the trend towards a totally digitally connected world was accelerated by 18 months of online working and socializing. As the data center market matures, the future for the industry in Africa and globally looks resoundingly positive.”

“Fresh sources of demand and significant market opportunity were found in regions where people are at the steepest part of the digital adoption curve, such as parts of Africa and South America. This is where the digital market is coming of age and the use of internet-enabled devices are soaring,” said Cerutti.

The Index showed that the cost per watt remained relatively flat in Johannesburg rising from $6.6/w in 2020 to just $6.7/w this year. Nairobi was similar rising from $6.9/w in 2020 to $7/w this year.

“With less competition - and build costs coming in around a third less than key primary markets – market interest is turning toward developing nations,” said Cerutti.

As the climate crisis continues, Turner & Townsend said many data center leaders were coming forward with climate pledges. The regulatory landscape around net-zero was also creating new risks, coupled with the growing client and consumer expectations.

“Showing willingness is important but achieving these goals will be tough for an industry that accounts for one percent of global electricity use,” said Cerutti. “Supporting continued global growth to meet the rising digital demand, while also improving the sector’s environmental performance, will take nothing short of a revolution in how we produce and store energy.”

According to the Index: Careful planning, investment in green technologies, and upskilling of the supply chain must all happen at pace and scale to deliver the necessary infrastructure for a new net-zero digital world.

“It is imperative that we didn’t limit data center growth across the world by ignoring the growing need to tackle carbon emissions released by the sector. It won’t be easy but cutting these emissions will take a global, programmatic approach with transparent and published plans,” said Cerutti.

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