Kathy Gibson reports from Zagreb, Croatia – The data centre today is becoming an artificial intelligence (AI) factory, and this means organisations have to find new ways to quickly build capacity.

This is the word from Vladimir Galabov, research director: cloud and data centre at Omdia.

“This has been a difficult year to be an analyst,” he says. “There have been significant changes of priorities. There has been a gold rush to launch new large language models (LLMs) to take advantage of generative artificial intelligence (GenAI).

“To me, this has all been driven by a fear of missing out. So there has been a big change in priorities.”

The money has been spent on building out power, Galabov says, and the world has entered an intense five-year period of increased data centre power capacity.

The prefabricated data centre technology is key to enabling this build-out.

It is important to realise that the top 10 data centre operators have already adopted modular strategies, Galabov points out.

“There is a huge rush among the hyperscalers to actually create something they can sell, and sell a lot of,” he says. “As a result, we expect to see even more demand for prefabricated data centre modules.

“The change of priorities in the market has been extraordinary,” Galabov adds.

The average annual data centre capex of a hyperscale cloud service provider is around $25-billion – but in 2023, this has increased to $30-billion to cater for AI infrastructure.

“The market is already changing. So the other parts of the market have seen a disinvestment of about 20%,” Galabov says. “This is why we have seen a good year for the data centre, but actually a bad year for traditional data centre providers.”

What this means for power capacity is immense. In 2023, he says, we doubled our power capacity for AI – and about 22% of all power is now used for AI.

Omdia expects this will increase to 41% once everyone is able to get their hands on AI servers.

“So the market is really significant,” Galabov notes.

Just a handful of companies were able to purchase an Nvidia GPU capable of training LLMs this year – from the early access programme.

Next year, the broader market will start buying, Galabov points out.

In 2023, enterprises have been doing proof of concept and defining their AI strategies – in 2024 they will start deploying.

“But there will only be a handful of companies that deploy AI data centres,” Galabov believes.

Energy use will rise a lot, and rapidly, he adds. In the AI rollout phase we are seeing the beginning of a five-year spike in energy. So prefabricated power and cooling is going to become a critical enabler, Galabov says.

In the next stage, there will be a focus on efficiency, where data centres that are highly optimised will come to the forefront.

At the peak in 2030, the data centre market will be 2% of global electricity consumption, Galabov believes – although it could be as high as 7%.

“So we will see a doubling of data centre electricity consumption, and physical infrastructure will be needed for this.”

If we use traditional data centre models we won’t be able to keep up with the demand for new capacity, Galabov says “refabricated data centre modules let enterprises quickly add capacity. AI is a race for time, so speed is important.”

Because data centre infrastructure is changing, the rack density is increasing – from about 20kW to 30kW today, to 40kW to 50kW in the next two years, and then to 70kw to 100kw up to 2027.

Eventually, this will require the elimination of air cooling, so liquid cooling is going to enable a new wave of super-dense rack servers.

Again, prefabricated data centre modules can enable this and help enterprises to deploy dense racks relatively quickly.

Data centre capex is not going to change as significantly as power requirements are growing, so companies have to get smarter about how they run their IT.

Thay have to reduce their footprint and raise density to do this – and prefabricated solutions can enable this balance.

Physical infrastructure spend is growing at a relatively slow pace, with power and cooling solutions growing at a much higher rate, Galabov explains.

So modular solutions will grow at a higher rate, he adds. Omdia recently increased its forecast for prefabricated modular data centres to $4-billion and expects it to hit $7-billion in 2027. And power modules are quickly becoming the most popular part of these data centre investments.

The global top five prefabricated data centre providers are Vertiv, Schneider Electric, Huawei, Johnson Control and ZTE, Galabov says, with Vertiv growing particularly in the European market.

Why build AI capacity with prefabricated data centres? According to Omdia research, the saving in time, the ability to expand capacity, and the fact that a factory controlled environment mitigates risk are top drivers.

“Customers tell us that scalabiity/modularty is the big benefit (53%), followed by ease of deployment at 50%,” Galabov says.

Other benefits are being able to follow hyperscaler in innovation (25%), standardisation (24%), sustainability (24%), attractive pricing (22%), and physical security (21%).