Season 4, Post 39: How cool is your data centre?

Every major city has several. They are rarely inspiring to look at, as your author can confirm. You might not even realise where they are located. But they are absolutely integral to the functioning of the digital economy. What we’re talking about are data centres. These buildings – or warehouses packed with servers – allow businesses not only to store data but also to connect their data with that of their customers/ suppliers in a secure and seamless fashion.

With data demand heading only one way, the number and density of data centres looks set only to grow. Powering data centres is, however, a non-trivial task. Servers can quickly get very hot and need to be cooled down to prevent possible faults arising. At present data centres account for 1.0-1.5% of global electricity use (per the IEA) and emit substantial amounts of heat.

Given the growing green agenda and the logic of decarbonisation, it is encouraging to learn that there are solutions at hand. Cities in both Sweden and Norway are aiming to recycle the heat given off by data centres. Stockholm Data Parks (a partnership between the city of Stockholm, energy company Stockholm Exergi, power grid operator Ellevio and others) announced recently that it aims to produce 10% of the heat required to meet Stockholm’s energy needs by 2035. Meanwhile, in Norway, the city of  Bjørnafjorden is developing a new commercial area, Lyseparken, which will have energy recycling infrastructure embedded from construction. In both instances, the heat from data centres is recycled by channelling it into underground water systems that run below urban areas. This heated water can then warm either commercial or residential buildings before it is returned to the data centre to be heated again, creating a virtuous circle effect.

We also checked in with Equinix, the world’s largest provider of carrier-neutral data centres. The business confirmed to us that it continues to look for ways to recycle heat from its facilities, where it makes sense (such as in its AM3 facility in Amsterdam or its PA2 and PA3 centres in Paris). The business also has a co-innovation centre where it works with partners in order to develop novel solutions. Hydrogen fuel cells could, for example, form part of future centres. More broadly, Equinix is also keen to make data centres not only literally but also metaphorically cooler. When we met with the company at its Redwood City headquarters in May much of our conversation centred on how Equinix is planning to grow the diversity of its workforce and recruit from as broad a pool of potential candidates as possible. A range of different initiatives are already underway. What could possibly be more attractive than working at the heart of the digital economy?  

4 October 2022​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
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​​​​​​​​​​​​​​​​​​The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Heptagon Capital is an investor in Equinix. The author of this piece has no personal direct investment in the business. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise. 

Alex Gunz, Fund Manager