Why should data rest in Wales?
Data centres store and process data. They make the data available to those who would need, and protect data that shouldn’t be shared.
For Wales to have a successful data centre industry, we must ask why Wales is a suitable place for companies, charities, government agencies to store and process their data here.
Wales has strengths and weaknesses.
Wales has strengths and weaknesses.
Location
Northern Europe comprises many advanced democracies with economies that rely heavily on information technology.
For an organisation looking to install services in a data centre, the decision rests on factors like cost, operational services and resilience. For a small number of critical applications, a very specific location is required - for example high frequency trading requires a very short round trip delay. However, most applications are not so sensitive - a basic website for example can be served from on another continent and perform satisfactorily.
Many multinationals with offices all around the world will adopt a ‘Follow the Sun’ operational model with three centres in different countries becoming active throughout the 24 hour day; each covering operations for the 8 hours that are normal business hours in that country. Operational centres in Paris, NewYork and Singapore would fit this model, for example.
Being near to users is preferable, but there is a trade-off with other factors. A multinational organisation might need data centres in Europe, but it would almost certainly be inefficient to use a data centre in each of France, Germany, Belgium, Denmark....and so on. It may well be that a couple of data centres in one or two of those countries will serve users across northern Europe.
Wales has direct access to the 65 Million people in the UK. From a geographical point of view this compares well with most other northern European countries.
For an organisation looking to install services in a data centre, the decision rests on factors like cost, operational services and resilience. For a small number of critical applications, a very specific location is required - for example high frequency trading requires a very short round trip delay. However, most applications are not so sensitive - a basic website for example can be served from on another continent and perform satisfactorily.
Many multinationals with offices all around the world will adopt a ‘Follow the Sun’ operational model with three centres in different countries becoming active throughout the 24 hour day; each covering operations for the 8 hours that are normal business hours in that country. Operational centres in Paris, NewYork and Singapore would fit this model, for example.
Being near to users is preferable, but there is a trade-off with other factors. A multinational organisation might need data centres in Europe, but it would almost certainly be inefficient to use a data centre in each of France, Germany, Belgium, Denmark....and so on. It may well be that a couple of data centres in one or two of those countries will serve users across northern Europe.
Wales has direct access to the 65 Million people in the UK. From a geographical point of view this compares well with most other northern European countries.
People and Skills
The M4 corridor has the highest concentration of technical companies in the UK. Stretching from London, the M4 motorway passes Heathrow Airport, cities like Slough Reading, Swindon and Bristol before passing into Wales connecting to Newport, Cardiff and Swansea.
Because of this link and the concentration of jobs at the eastern (London) end of the M4 corridor, many young Welsh people take well paid IT jobs in and around London. Wales therefore suffers from its proximity to London and the M4 corridor where job prospects in IT are much stronger. But this is a two edge sword: Wales can reasonably claim that a well qualified workforce is available as relocating from towns like Swindon and Reading is easily done and is the sort of thing that professional people do more than once during their careers. Anyone who has worked in IT in the home counties will have met Welsh people there who would happily return home if offered a suitable job, attracted by lower housing costs, better quality of life or for pure ‘Hiraeth’
Energy
Data centres need electricity and unsurprisingly there is significant growth in the energy market for data, so much so that the energy usage of data centres has created some interesting headlines.
- Data centres used 1% of all energy used worldwide, and this percentage is set to rise significantly.
- Data centres already use more energy that the Airline industry
- Bitcoin mining uses so much energy that China is cracking down on it due to the drain it places on resources in some areas.
- Texas, USA and other places trying to get ‘bitcoin miners’ to host in their locations, but are meeting resistance as these states have issues with drought and climate change and proposals to build big data centres in places with a hot climate are not popular
There is good news however, growth in data centres continues, but the growth in energy used by data centres has not increased by anything like as much. The amount of computing done in data centres more than quintupled between 2010 and 2018. However, the amount of energy consumed by the world’s data centres grew only six percent during that period. This is due to improvements in energy efficiency3.
The situation in Wales is more positive too. A small number of large data centres has less environmental impact than a large number of small ones, or individual servers spread through lots of small offices. Wales has a cooler climate than many places, and crucially is energy rich, with a large and growing base of electricity generating facilities using renewable technology.
The Vantage Data Centre in Newport is built on what will be the largest data centre campus in Europe. The data centre there currently has 70 MWatt capacity, but has potential to rise up to 240 MWatt capacity. (70 MWatts is sufficient to power around 19,000 houses; 240 MWatt is sufficient to power around 64,000 houses)
A significant portion of the energy use by data centres is due to the cooling systems required to keep racks of servers cool. Many larger data centres use water cooling systems, and this can have environmental implications too. States like Arizona in the US have been pushing back against plans for new data centres for these reasons. Countries with cold climates have an advantage.
Telecommunications and Global Connectivity
Connections to telecommunications companies and the internet are vital to data centres. A data centre with poor connectivity is useless. Any data centre of reasonable size will have multiple connections routed through different paths out of the building to telecommunications networks.
A data centre which has very good connections to the internet backbone will deliver superior performance in many applications. A data centre that can connect to international links with as little intervening infrastructure as possible is likely to be more attractive to international customers.
The situation in Wales is a familiar one: like road and rail networks the communications networks in the UK are London Centric. International connections into the UK are scattered along the UK coast, but there are very few that land in Wales.
Some places in Wales like Cardiff may be able to offer good connectivity, but will not be as good as London. This reflects the situation with poor broadband coverage in rural areas of Wales: these two issues are related.
Connectivity is an area that needs to be addressed to make Wales competitive in the global market. The cost of doing this may not be excessive - extending domestic infrastructure to improve connectivity should not require too much expenditure and can be addressed together with extending broadband coverage. International subsea cables are in place along the north and south coasts of Wales, and there is potential to improve connectivity there.
Data centres with better environmental credentials are more likely to attract business and investment. Wales has reasonably good position here. Wales produces a high level of green energy and is an Energy exporter. England, on the other hand, imports electricity from Wales, Scotland and from continental Europe.
Wales is well on the path to reaching its target of 70% of electricity consumption from renewable sources.
Data centres in Wales can be powered by energy generated in Wales, making use of a home grown resource. Furthermore, a claim can reasonably be made that the data centres are powered from renewable energy sources, a feature which is an attractive marketing proposition.
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