Green Data Center Market

The emergence of Al in cooling and power technologies is driving market growth.

Market CAGR for the green data center is driven by the rising Al in cooling and power technologies. Al and ML are anticipated to play a major role in the future to efficiently power and cool data centers worldwide. For instance, Google has been collaborating with the British artificial intelligence startup DeepMind to create an Al algorithm that would enable reducing the electricity needed for cooling without necessitating costly data centre relocations. 

Al approaches the cooling power problem by optimizing effective power management. Leveraging deep learning techniques, Al breaks down vast quantities of historical data from several aspects of operating the data center and uses predictive modeling to gauge the effect on energy utilization. Google and DeepMind's algorithm, AlphaGo, involves the trial-and-error reinforcement education model to find out the best framework for cooling infrastructure, such as fans and ventilation, which would most virtually lower energy utilization. Recommendations from AlphaGo were then involved at Google's data centers, showing a 40% decrease in power expenses related to the cooling systems.

Additionally, the rapidly surging data traffic escalates the demand for efficient data storage and management. The green data center offers eco-friendly and effective data storage with reduced energy utilization. Thus, the optimistic outlook of the data center storage needs and the growing demand to decrease overall operational expenditure would likely drive the green data center's market growth. In various countries, the government is taking active measures to develop sustainable, eco-friendly, energy-efficient, and cost-effective data centers. Thus, stringent environmental energy-saving regulations will drive the green data center market revenue.

The green data center market is highly competitive because many players run their businesses domestically and internationally. The market is moderately concentrated. The prominent strategies adopted by the major players are product innovation and mergers and acquisitions. For instance, In November 2022, SB Energy Global partnered with Google to supply 942 MW of Green Energy to match Google's texas Data center consumption.

Under the partnership, Google's investment in Texas and commitment to clean energy will be supported by 75% of the renewable energy generated by four solar projects of SB Energy that have a combined capacity of 1.2 gigawatts and are currently under construction. These projects aim to be operational by the middle of 2024.

The Global Green Data Center Market Industry is poised for substantial growth, with projections indicating a market value of 633.0 USD Billion by 2035. This growth is driven by various factors, including rising energy efficiency demands, government initiatives, and technological advancements. The compound annual growth rate is expected to reach 32.47 percent from 2025 to 2035, reflecting the increasing importance of sustainability in data center operations. As organizations prioritize green practices, the market is likely to expand rapidly, highlighting the critical role of green data centers in the future of technology.

The Global Green Data Center Market Industry is experiencing a surge in demand for energy-efficient solutions. Organizations are increasingly prioritizing sustainability, driven by regulatory pressures and consumer preferences. This shift is evident as companies aim to reduce their carbon footprints and operational costs. For instance, energy-efficient data centers can reduce energy consumption by up to 40 percent compared to traditional setups. As of 2024, the market is valued at 28.7 USD Billion, indicating a robust growth trajectory as businesses invest in greener technologies to meet these demands.

The rise in cloud computing is reshaping the Global Green Data Center Market Industry. As businesses migrate to cloud-based solutions, the demand for energy-efficient data centers increases. Cloud service providers are under pressure to optimize their operations and reduce energy consumption, leading to investments in green technologies. This trend is expected to drive significant growth in the market, as organizations seek scalable and sustainable solutions. The increasing reliance on cloud services is likely to contribute to the overall market expansion, aligning with the broader shift towards digital transformation.

Government policies play a pivotal role in shaping the Global Green Data Center Market Industry. Various countries are implementing initiatives to promote sustainable practices, including tax incentives and grants for energy-efficient infrastructure. For example, the United States has introduced programs that encourage the adoption of renewable energy sources in data centers. These initiatives not only support environmental goals but also stimulate economic growth. As a result, the market is projected to grow significantly, with estimates suggesting a valuation of 633.0 USD Billion by 2035, reflecting the impact of supportive government policies.

The shift towards renewable energy sources is a significant driver of the Global Green Data Center Market Industry. Companies are increasingly investing in solar, wind, and other renewable energy solutions to power their data centers. This transition not only reduces reliance on fossil fuels but also aligns with corporate sustainability goals. For instance, major tech companies are committing to 100 percent renewable energy usage in their operations. This trend is likely to accelerate market growth, as organizations recognize the long-term cost benefits and environmental impact of renewable energy adoption.

Innovations in cooling technologies are transforming the Global Green Data Center Market Industry. Advanced cooling solutions, such as liquid cooling and free-air cooling, are being adopted to enhance energy efficiency. These technologies can reduce energy consumption by up to 50 percent, addressing one of the largest operational costs in data centers. As organizations seek to optimize their operations, the integration of these technologies is becoming increasingly common. This trend is expected to contribute to a compound annual growth rate of 32.47 percent from 2025 to 2035, underscoring the importance of technological advancements in driving market growth.

By region, the study provides market insights into North America, Europe, Asia-Pacific and the Rest of the World. The North American green data center market will dominate owing to an increase in digitalization and adoption of green data center solutions by various sectors such as manufacturing, BFSI, and governments in this region. Further, the US green data center market held the largest market share, and the Canadian green data center market was the fastest-growing market in the North American region.

Further, the major countries studied in the market report are The US, Canada, German, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.

Figure 2: Green Data Center Market SHARE BY REGION 2022 (USD Billion)

Source: Secondary Research, Primary Research, MRFR Database and Analyst Review

Europe's green data center market accounts for the second-largest market share due to the rapidly expanding population and the advent of e-commerce in this region. Further, the German green data center market held the largest market share, and the UK green data center market was the fastest-growing market in the European region.

The Asia-Pacific green data center market is expected to grow at the fastest CAGR from 2023 to 2032. This is due to increasing IT and telecommunication sectors and enhancement in the healthcare industry driving the market in this region. Moreover, China’s green data center market held the largest market share, and the Indian green data center market was the fastest-growing market in the Asia-Pacific region.

Leading market players are investing heavily in research and development to expand their product lines, which will help the green data center market grow even more. Market participants are also undertaking various strategic activities to expand their global footprint, with important market developments including new product launches, contractual agreements, mergers and acquisitions, higher investments, and collaboration with other organizations. To expand and survive in a more competitive and rising market climate, the green data center industry must offer cost-effective items.

Manufacturing locally to minimize operational costs is one of the key business tactics manufacturers use in the global green data center industry to benefit clients and increase the market sector. Major players in the green data center market, including Schneider Electric SE, Hewlett Packard Enterprise Company, Green Revolution Cooling, Inc., Eaton Corporation PLC, Dell Technologies, Inc., and others, are attempting to increase market demand by investing in R&D operations.

Dell Technologies Inc provides desktop personal computers, software, and peripherals. The firm designs, manufactures, markets, sells, develops, and supports information technology infrastructure such as laptops, mobiles, desktops, workstations, storage devices, cloud solutions, software, and notebooks. It markets products under Dell, Pivotal, Dell EMC, SecureWorks, and Alienware, brand names. Dell also delivers a range of financial services, such as collecting, originating, and servicing customer receivables financing agreements related to the usage of its products, software, and service solutions. 

Dell serves corporate businesses, educational institutions, government, healthcare organizations, law enforcement agencies, and small and medium-sized businesses. In November 2020, Dell Technologies partnered with FedEx Corp and Switch Inc.; the companies developed a series of data centers all over the US to support low-latency edge workloads. Under this partnership, FedEx provides real estate and emerges as the first customer. In contrast, Switch develops the data center infrastructure, and Dell Technologies delivers storage, cloud computing, networking, and support services.

Volkswagen AG (Volkswagen), a Porsche Automobil Holding SE subsidiary, is an automobile manufacturer. The company develops vehicles and engines and produces and sells passenger cars, trucks, buses and motorcycles, light commercial vehicles, genuine parts, turbomachinery, large-bore diesel engines, propulsion components, special gear units and testing systems. It also provides leasing, banking and insurance, dealer and customer financing, fleet management and mobility services. Volkswagen markets products under brands such as Volkswagen, Porsche, Bugatti, Lamborghini, Bentley, Audi, Ducati, Scania and Cupra. 

In November 2022, Volkswagen AG aims to make its data center operations net carbon neutral by 2027. The company has enhanced its computing capacities at the Norwegian operator of CO₂-neutral data centers to reach this goal by partnering with Green Mountain. The partnership with Green Mountain will allow Volkswagen to hit this target, with all servers at Green Mountain running on 100% renewable electricity generated by hydropower. At the same time, they are naturally cooled by the adjacent fjord.