The data center market in Europe is booming and yet is beginning to look completely different than it was. International market research and market data giant, Research and Markets, notes that despite general concerns like “…economic headwinds, notably rising energy costs, inflation and the threat of an economic slowdown…,” that investment still continues to rapidly increase throughout Europe.
Others like DataCenterHawk concur but note constraints like falling vacancy rates, power limitations, climate regulations, and hyperscale demand gobbling up adjacent market capacity. These factors are “…straining large-scale data center supply in several of these regions…” like Berlin, Madrid, Milan, Zurich and the Nordics.
Enter Portugal. This hidden gem of digital infrastructure opportunity has several strategic reasons for floating near the top of the list for hyperscale and enterprise colocation siting managers. Here are 5 reasons Portugal should be on your radar.
#1. Lower cost power compared to FLAP-D.
Sines sits at one of the most interesting power nodes in the country and connects directly into the European 400 KV grid. Portugal has abundant energy supply to support planned development to deliver hyperscale capacity in a sustainable, secure and resilient way with extremely low power costs relative to alternatives located in FLAP-D (Frankfurt, London, Amsterdam, Paris, and Dublin) cities. The climate is relatively cool, despite the excellent solar resources and the Atlantic Ocean is an amazingly large heat sink with stable and cool temperatures. Ocean cooling, cheap solar development, and persistently lower and more stable power costs translate into a 40% lower overall operating cost vs a FLAP-D equivalent, and it will also provide a range of additional benefits to the local power system.
#2. Abundant supplies of clean energy to support climate initiatives.
Portugal has a robust power system and strategic access to ample renewable energy supply. For example, Sines – located about 100 miles/150 km south of Lisbon – is an excellent location for a hyperscale colocation data center campus at scale. It will benefit from around 1GW of dedicated renewable energy generating capacity to support expansion over time. Another advantage here is the tendency for data center development to attract additional investment in renewable energy along with it. For example, at-scale development projects are recognized for stimulating additional investment in renewable power and injecting much-needed flexibility into the local power grids — increasingly valuable as the proportion of renewables increases overall in Europe.
#3. Affordable, available land to support thoughtful expansion.
Portugal offers great subsea connectivity, combined with a high capillary and redundant terrestrial connectivity network, allows, for example, “Green Giant” data center projects to take advantage of abundant and cheaper land, and proximity of renewable power, whilst guaranteeing great connectivity to major European hubs. Portugal is starting to play a role as a key country in the future of global connectivity, with a clear mandate to manage and distribute traffic between Europe and other continents.
#4. Robust terrestrial and subsea connectivity options… and growing.
We are seeing the emergence of global connectivity disparities, where Europe lags behind the United States, with Americas’ installed bandwidth capacity 106 higher than EMEA, by the end of 2020. A new vision of Europe’s connectivity is ongoing, with the commitment to build its infrastructure to cope with data dependency from other major hubs in the US and Asia securing a funding of 1 B€ under the Connecting Europe Facility project. This new vision will benefit those countries that are a good base for global subsea cable connections and have dense terrestrial connectivity to their European counterparts. Despite its fantastic geographical location for subsea cables, Portugal has not been typically the focus of large connectivity and data center players due to lack of information and awareness. This is changing, as it should.
#5. Sensible, secure and confidential privacy and cybersecurity regime to support sophisticated and emerging enterprise needs.
Portugal presents a unique solution to the challenges posed by the trend towards data sovereignty and the growing sophistication of global cyber threats. Portugal is a welcoming hub for large technology companies and hyperscalers, with minimal restrictions on data processing within the EU framework. Portugal adheres to best practices in the law and regulation of data protection, yet at the same time it is consistently ranked as one of the most business-friendly, stable and open jurisdictions in the EU. Publicly recognised for fostering innovation, Portugal has taken concrete steps to embrace digital transformation and encourage technological investment. Portugal’s cybersecurity framework also aligns its laws with industry-leading international standards and certifications. While working within the high standards of the EU framework, Portugal maintains a sensible, secure and confidential privacy and cybersecurity enforcement regime.
All of this comes with a favorable policy climate ripe for digital infrastructure and corporate expansion in Portugal. Pro tip for hyperscale and enterprise data center siting managers: Portugal needs to be on your shortlist for European expansion planning.