When you think of handling your AI data center needs, you need to be open to new locations. The most strategically positioned data centers have reliable access to power, can handle the density and capacity needed for AI, offer renewable energy and innovative cooling, and have sufficient interconnections.
We are seeing a gold rush for building up Tier I locations. While every region is being eyed for future AI deployments, Germany – especially Frankfurt – is among the top considerations.
Why AI Data Center Demand Is Growing in Europe
AI's increasing role in various industries and applications is leading to significant data center growth in Europe. Meeting the computational and data storage demands of AI, while adhering to strict data protection regulations, is shaping the data center landscape in the region.
Europe as a whole provides stringent data protection regulations like GDPR, which requires data to be stored and processed locally. Data centers within the region need to meet strict compliance requirements, as GDPR also allows organizations that enable data sovereignty to keep their sensitive data within the region’s borders. This, in turn, empowers organizations to avoid potential legal and security issues.
In terms of energy efficiency, Europe has a strong emphasis on sustainability, and modern data centers with energy-efficient infrastructure and renewable energy sources are attractive for AI workloads.
Europe is also home to many AI research institutions and startups, increasing the demand for data centers to support research, development, and innovation in this field.
Lastly, we are also seeing cloud service providers massively expanding their presence in Europe to cater to the growing demand for AI-powered services. These providers require substantial data center infrastructure to deliver AI capabilities to their customers.
These factors, along with the expanding AI landscape, contribute to the growing demand for data centers in Europe to support AI-related workloads and applications.
Five Reasons Why Enterprises and Scale-ups Should Consider Germany for AI
Germany, the leading economy in Europe, is seeing a spike in AI data center demand because it provides the necessary regulatory compliance. There are a few additional benefits that make Germany an attractive location for data centers, particularly for companies seeking a secure, well-connected, and compliant environment for AI deployments:
- Germany’s central geographic location provides excellent connectivity to all other European markets, facilitating data exchange and collaboration. DE-CIX (the world’s largest internet exchange) provides premium interconnection services and operates several carrier- and data center-neutral internet exchanges in Europe, the Middle East, North America, Asia, and Africa.
- German data protection laws, including GDPR, which are seen as the strictest in Europe so far, ensure a high level of data security and privacy. This is important when dealing with sensitive AI applications and data. Also, hosting AI systems in Germany can help ensure compliance with European Union regulations, reducing legal risks associated with data handling.
- Germany is the largest economy in the European Union. This provides a safe environment for data center investments. Also, the country's political stability contributes to a secure and predictable business climate, which is important for long-term AI projects. Its thriving tech and innovation ecosystem fosters collaboration and partnerships for data centers. Enterprises and scale-ups alike can benefit.
- Germany’s well-developed infrastructure includes reliable power grids and high-speed internet connections, essential for AI data center operations. German data centers boast robust and reliable power and infrastructure, reducing the risk of downtime and ensuring uninterrupted AI operations.
- Germany has been increasing its use of renewable energy sources, which can help data centers meet sustainability goals. Many data centers in Germany prioritize sustainability, aligning with global efforts to reduce carbon footprints.
AI Demand May Leave Enterprises and Scale-Ups Behind
The demand for AI may leave enterprises and scale-ups behind. Why? Hyperscalers like Amazon Web Services, Microsoft Azure, and Google Cloud are expanding their AI services and infrastructure to meet their customers’ increasing demand. They require massive capacity to support their vast customer base and compute-intensive AI workloads.
As hyperscalers secure large portions of available power and data center space, there will come a time (likely soon) in which there will be limited capacity left for enterprises seeking to establish or expand their (present and future) data center presence. This will lead to competition for physical space but also other critical resources, such as skilled personnel, power, and network connectivity. Limited supply and increased demand will naturally lead to rising costs, making it challenging for enterprises to secure these resources.
To address these challenges now, enterprises and scale-ups should consider some alternative strategies:
- Embracing a hybrid cloud approach, where some workloads are hosted in hyperscale cloud environments and others in on-premises or colocation data centers, can provide flexibility and reduce dependence on hyperscalers.
- Partnering with colocation providers for data center space and services. Enterprises and scale-ups can get access to high-quality infrastructure, but there’s no need to manage their own facilities.
- Exploring edge computing solutions can reduce the reliance on centralized data centers. By processing data closer to the source, enterprises can reduce latency and gain more control over their AI applications.
- Buy for the future. Some enterprises and scale-ups are already buying hardware and data center capacity now to ensure they can meet their future needs.
The impending expansion of hyperscalers for AI-related data center space will likely create challenges for enterprises, but strategic planning, including hybrid approaches and partnerships with colocation providers, and alternative locations like Germany can help them navigate this competitive landscape.
If your organization is seeking to become international or global with AI, you should consider Germany. Its location, connectivity, data protection, business climate, and commitment to sustainability are key to the growth of any organization ready for AI.
Oliver Menzel is CEO of Maincubes, a European data center operator providing colocation solutions for public entities, global enterprises, and service providers.
