Test Dev Only - The impact of emerging market trends on the edge data centre industry

The edge data centre market: key trends

The edge data centre market (broadly defined as smaller, more distributed data centres, localising data storage and compute closer to end users) is experiencing 92% year on year growth.[1] This growth is being driven by a combination of factors including:

• Increasing demand for real-time processing and analysis.
• Stringent data privacy and compliance requirements in certain industries, which mandate data to be kept local.
• Continued increase in the amount and quality of video being shared putting pressure on existing networks and compute capacity.
  
  

Three of the biggest trends impacting the edge data centre market today are:

• Sustainability
• Rise of AI
• Cloud repatriation
  
  

Sustainability efforts are transforming data centre operations

Data centres are known for their high energy consumption, which is only increasing with the introduction of AI. Storing and analysing data to train machine learning (ML) and large language models (LLMs) is continuously increasing energy usage. For example, it is estimated that producing GPT-3 required 1,287 megawatt hours of electricity and resulted in 552 tons of CO2 emissions.[2] This is equivalent to the emissions produced by 123 gasoline-powered passenger vehicles driven for a year. Additionally, data centres are now adopting high-density racks, which can house more servers in a smaller area, leading to even higher energy demands.

Governments globally are increasing their scrutiny of data centre construction due to concerns that their significant energy consumption is placing strain on national climate objectives and electricity grids. For example, data centres in Ireland are projected to account for 32% of national electricity demand in 2026.[3] As such, many countries, such as Ireland, Germany and Singapore, have recently introduced restrictions limiting new data connections to the electricity grid.[4]

Data centre operators are therefore looking to make changes to their operations, in order to address to continue to serve market demand, while reducing their carbon footprint. Edge data centre operators face some unique challenges and opportunities when it comes to being sustainable. For instance, implementing typical data centre features like sophisticated heating, ventilation and air-conditioning (HVAC) systems may not be economically viable in such environments because of the absence of economies of scale. However, edge data centres have certain unique opportunities to be more sustainable than their hyperscale data centre counterparts. For instance, it may be easier for edge data centres to pursue heat reuse strategies, since they are more likely to be located physically close to buildings or public infrastructure that could be heated by the heat generated by the IT equipment.

Edge data centre operators today are employing some of the following strategies to try and reduce their PUE and associated carbon footprint:

• Introducing energy efficient technologies. Edge data centre operators are investing heavily in energy-efficient technologies and practices. This includes using more energy-efficient hardware, implementing advanced cooling systems, and optimising server utilisation to reduce energy waste. AI technologies can also be used to optimise energy usage within data centres by dynamically adjusting cooling systems, adjusting server power settings, and scheduling workloads to take advantage of renewable energy sources.
• Adopting renewable energy. Many data centre operators are increasingly turning to renewable energy sources such as solar, wind, and hydroelectric energy to power their facilities. This not only helps to reduce carbon emissions but also provides long-term stability in energy costs as renewable energy becomes more cost competitive.
• Developing green building standards. Sustainability considerations are influencing the design and construction of data centres. Green building standards such as LEED (Leadership in Energy and Environmental Design) are being increasingly applied to data centre construction projects, focusing on factors such as energy efficiency, water conservation, and use of environmentally friendly materials.
• Committing to carbon neutrality. Data centre providers are making commitments to achieve carbon neutrality or even carbon negativity. This involves not only reducing their own emissions but also investing in carbon offsetting projects such as reforestation and renewable energy initiatives to mitigate the environmental impact of their operations.
  
  

By implementing these practices, edge data centre operators are paving the way for a more sustainable future.

Edge data centres will be necessary to support AI

AI technologies need a lot of computational power, storage space and low-latency networking to train and run models. Data centres serve as the preferred hosting environment for these technologies, therefore, as demand for AI continues to grow, the demand for data centres can be expected to grow accordingly. However, this poses a challenge as restrictions limiting new data centres to connect to the electric grid is impacting data centre build out.

Edge data centres might offer an answer to this data centre capacity problem. As it becomes more difficult to build new sites in FLAPD and other key locations, some of this capacity could be moved to the edge. It is estimated that up to 50% of AI workloads could be moved to the edge by 2028.[5] Edge capacity is expected to support a number of leading AI use cases, such as computer vision.

Computer vision is a prime example of a use case that benefits significantly from edge data centres due to a number of its requirements including:

• Low latency: Computer vision applications often need to make rapid decisions based on real-time data from cameras or sensors. For instance, in driver assistance systems, immediate responses to changing road conditions are critical for safety. By processing data closer to the source at the edge, rather than sending it back to a centralised data centre, latency is reduced, enabling quicker decision-making.
• Data privacy and security: Certain computer vision applications, like surveillance or facial recognition, may involve sensitive data that needs to be processed locally to ensure privacy and comply with regulations. Edge data centres allow for data processing to occur closer to the source, minimising the risk of data breaches.
• Bandwidth efficiency: Transmitting large volumes of raw video data from multiple cameras to a centralised data centre can strain network bandwidth and incur high costs. Edge data centres can process data locally, sending only relevant information or analysed insights back to the central server. This reduces the burden on the network and optimises bandwidth usage.
  
  

As the demand for real-time processing and intelligent decision-making continues to grow across various industries, the role of edge computing in supporting AI use cases is expected to become increasingly prominent.

Cloud repatriation is driving demand for edge data centres

In today’s rapidly evolving business landscape, many companies are under pressure to modernise their operations. Cloud computing has emerged as a cornerstone for this modernisation effort, with many businesses choosing to move their workloads and applications to the cloud. However, some of these businesses are now encountering challenges related to managing costs and ensuring data privacy. As such, a growing number of organisations are considering cloud repatriation as a strategic option. Cloud repatriation involves the migration of data, applications, or workloads from public cloud environments back to on-premise or collocated infrastructure. This can occur for various reasons, including:

• Cost concerns: Companies find that the ongoing expenses of maintaining resources in the cloud outweigh the initial savings or that their usage patterns have changed. Businesses also prefer assurance of a fixed fee rather than pay-as-you-go model, which is common for cloud services.
• Performance issues: Certain workloads require low latency or high performance that cannot be achieved in the cloud due to network limitations.
• Compliance or regulatory requirements: Some organisations may need to comply with specific regulations that restrict where data can be stored or processed, requiring a move from the cloud to on-premises infrastructure or edge.
  
  

Edge data centres can allow businesses to address these concerns while maintaining agility and scalability offered by cloud computing. A growing interest in cloud repatriation from certain groups of enterprise will drive demand for edge data centres.

Conclusion

The convergence of sustainability efforts, the demand for AI infrastructure, and the rise of cloud repatriation positions edge data centres as pivotal players in the evolving landscape of data management and computing.

Pulsant’s leading edge infrastructure platform, platformEDGE™, is used by businesses across the UK to build, connect and deploy the hybrid workloads they need to reach their digital goals and drive competitive advantage.­