This article originally appeared in the Winter 2023 issue of The AFCOM Journal. AFCOM members are welcome to access the full issue here. Non-members can gain access to The AFCOM Journal (including back issues) by joining today.
Modular data centers are happening. Research from Omdia reveals that revenue for modular facilities built onsite using prefabricated components rose from about $2.3 billion in 2020 to $3.25 billion in 2023. Modular data centers are forecast to experience 13% annual growth through 2026, at which point the market will be worth $5.25 billion.
“Modular data centers address three major concerns of data center deployment: lead time, predictability, and cost,” says Vlad Galabov, director of Cloud and Data Center Research at Omdia. “They help ensure that a project will be completed at a predetermined quality and cost.”
He added that modular data centers offer opportunities to drive sustainability, enabling construction with less or sometimes no concrete, fewer building components, fewer staff on site, and a lowering of Scope 3 emissions. As a result, more off-the-shelf offerings that incorporate standardized designs are hitting the market. End users can even download engineering documentation to aid in purchase decisions.
According to Daniel Bizo, research director at Uptime Institute Intelligence, manufacturing, assembly, and system integration in a factory environment can be “better optimized and controlled for productivity and quality assurance.”
“A major factor contributing to this is the logistics advantage of a factory in having stocks of parts and availability of skilled labor that allows better scheduling of jobs, rigorous testing, and faster problem resolution,” he adds. “Prefabrication is fundamentally about the industrialization of construction jobs to reduce lead times, meet high standards with consistency, and to lower capital project risks – in other words, better process control.”
But modular data centers may not be for everyone. Let’s review where they make the most sense and where they don’t.
Sensible Modular Use Cases
There are a range of different products that fall under the modular data centers umbrella. All-in-one modules include IT, power, and cooling infrastructure and only need to be plugged in and added to the network. There are IT modules that comprise racks for servers, storage, and switches but lack supporting power and cooling infrastructure. There are power modules that include UPS, switchgear, batteries, fire suppression, generators, and other items. There are cooling modules that contain chillers or other gear to cool equipment. There are even empty shells that house one or other of these modules, and auxiliary units that provide extra space for network operation centers (NOCs), meeting rooms, office space, etc.
“Power system modularization is an area where we’ve seen much of the growth in recent years as cloud operators and large colocation providers opted to use power skids and modules for system integration of both medium-voltage and low-voltage power distribution to meet project needs in scale, speed, and quality,” says Bizo.
In addition, modular data centers vary in the amount of customization available. Most are ready-built with no customization. Some vendors offer custom-built units with up to 30% customization. There can also be purpose-built units that are 100% customizable.
Here are a few of the common use cases:
Small and Gradual Deployments
One reason people want to use a prefab or modular data center approach is that their needs are modest on day one, but they’re looking to scale in the future. For example, a customer may plan to grow a site from 50 kW on day 1 to 2 MW in 5-10 years or deploy one standard 100 kW unit in 20 different edge locations across the globe.
“Small, modular deployments are becoming increasingly common due to speed,” explains Aaron Badowski, product offering specialist at Vertiv, “A 100 kW unit of IT capacity can be designed, constructed, and delivered in as short as 25 weeks.”
With a modular strategy, customers can deploy infrastructure as they need it with a standard design. This simplifies maintenance and operations for owners across a site or as part of a global program.
“Modular prefab data centers are a good fit for clients needing a small amount of additional IT capacity (less than 2 MW) or for temporary capacity needs due to the ability to rapidly deploy pre-built modules,” notes Pat Lynch, executive managing director and global head of CBRE Data Center Solutions.
He adds: “Businesses that need to quickly scale their IT capacity can also benefit from the rapid deployment capabilities of modular prefab data centers.”
Retrofitting or Supplementing Existing Infrastructure
Larger hyperscale, colocation, and enterprise clients may wish to adapt a site or add capacity at a current facility. With prefabricated modules, they have the option of deploying supplemental turnkey capacity beside their current data center.
Further, the demand to make existing facilities denser to fit in more racks or host AI-based applications can sometimes be served via modular units. How? Some choose to create more white space for racks by pulling their power infrastructure out of their current data center and placing it in a module outside of the building.
“This offers additional white space square footage to deploy more racks and, in turn, more IT load,” says Badowski.
Alternatively, some need more power for their facility and can add it by ordering a modular power unit. Additional power capacity can be dropped right outside the building and tied into the existing architecture. This increases UPS backup and switchgear capacities as your IT load grows inside a client’s existing architecture.
Large Deployment Infrastructure
Hyperscale clients sometimes turn to stick-built as part of their approach to deploying data centers of 50 MW or more. Some designs incorporate repeatable blocks for their electrical rooms and cooling spaces.
“Prefabrication can support large deployments across the country with standardized skids and power modules,” says Badowski, “UPS, switchgear, and cooling lineups are integrated offsite on skids or modules, transported and dropped into place like a Lego block on a large site.”
Edge Data Centers
The telecoms market is becoming a hotbed for modular edge deployments. They are placing modules beside cell towers to support 4G and 5G rollout plans. Demand for low-latency solutions is also driving the need for smaller, standardized deployments closer to end users.
“The ease of deployment and portability of modular units make them candidates for edge locations where the skills required to build a data center are often scarce,” explains Michail Kefalakis, POD solution architect at HPE Sustainable Data Center Modernization Practice.
“All-in-one prefab solutions, where all components are included in a single module, are often the preferred choice for the edge.”
Hybrid Cloud with AI
Modular prefabricated data centers are being installed to serve a variety of hybrid cloud use cases, including support for fast-growing high-performance computing (HPC) and AI workloads.
Kefalakis says: “Among the biggest areas of growth for modular data centers are HPC/AI, hybrid cloud, intelligent edge, 5G networks, military and defense, and Industry 4.0. Enterprises are attracted by the lean initial investments, fast implementation, energy efficiency, and scalability of prefab data centers.”
He added that modular units can be brought online in a couple of months versus one or two years for stick-built data centers.
When Modular May Not Be the Best Course
Modular use cases are growing. But that doesn’t mean prefab units or prefabricated data centers are right for every occasion. Here are some of the use cases where modular may not make sense:
Yes, modular units can be customized and a few of them are purpose-built. But in most cases, their value proposition is strongest as standardized units bought “off the shelf.” As more customization is added, costs increase, and the inherent benefits of modular construction are reduced.
One of the areas, therefore, where stick-built data centers hold high value over modular construction is in custom and unique data center designs. In many cases, large-scale deployments fit into this category. Hyperscalers, for example, tend to specify very large, highly customized designs. Prefabrication is generally not part of the process. At most, smaller modular units are incorporated for power and for standardized skids that are needed throughout a large data center.
“Modular finds its value in large-scale deployments by scoping small packages of infrastructure onto skids and modules to support the construction process,” says Badowski.
“When program strategies become very complex and unique with little volume, the value of modular disappears.”
Large Data Centers
The latest data centers are bigger than ever. One Chindata facility amounts to more than 10 million sq.ft. And the average capacity per data center building is now up to 137,000 square feet for cloud and colocation companies, according to research firm Omdia. This is largely down to the tendency of colocation providers like Equinix, Digital Realty, and Chindata, as well as hyperscalers like Google Cloud Platform, Amazon Web Services, and Microsoft Azure, to build bigger, better, and more efficient data centers. If you take cloud service providers alone, the average data center capacity is 205,000 square feet. Amazon, for example, recently proposed two new data centers in Mesa, Arizona, each about 227,000 sq.ft.
“Cloud service providers have the highest average capacity per building, driven by larger hyperscale designs and the occasional acquisition of industrial buildings repurposed as data centers,” notes Alan Howard, principal analyst at Omdia. “Google has a four-story design it occasionally uses on its data center campuses that span 550,000 sq.ft.”
Big data centers and those with multiple stories don’t tend to be candidates for modularization.
“Modular prefab designs are generally not a good choice when there is a need to assemble large, contiguous data halls, especially on multi-story, stacked, high-rises seen in very large colocation data centers and hyperscaler facilities,” says Kefalakis.
Lynch concurs, adding that modular solutions are not ideal for massive hyperscale data centers, which require very large contiguous facilities. Companies wanting a highly customized data center may find prefabricated data centers too standardized and inflexible in design.
Lynch says: “Modular prefab data centers can also face challenges meeting seismic requirements making them unsuitable for deployments in certain geographic areas.”
The number of vendors in the market and the volume of prefabricated products and options has risen sharply in recent years. The revenue growth figures for modular data centers, too, are impressive.
“The modular data center market is growing three times as fast as the overall data center market,” explains Kefalakis.
But some perspective is needed. At the end of 2022, modular data centers only accounted for 3.6% of overall data center revenue. After several years of rapid expansion, it will represent less than 5% of revenue by the end of 2026, according to Omdia.
Depending on who you ask, modular data centers will either remain a niche market or will conquer the world. Vertiv is understandably bullish.
“Much of the construction market will be taken up by modular prefab in the coming years,” says Badowski.
Time will tell.