Hyperscale Data Centers – The Hype is Real

Hyperscale data centers require flexibility to deliver value.

In 2018, Facebook set a record that may have flown under many people’s radar: the social media giant signed a 72-megawatt deal to lease data center space in Ashburn, Virginia, the largest colocation data center deal of all time.

For context, 1 megawatt can power about 700 homes. Sustaining 72 megawatts per hour in one data center campus, the equivalent of over 50,000 homes, is a tremendous feat—albeit, one that may become increasingly common in the years ahead. Records are made to be broken, and many industry experts predict the world’s first ever 100-megawatt deal will arrive by the end of 2019.

But to think of a hyperscale facility as a massive data center that can sustain enormous power and bandwidth capacities would belie its real value. Yes, many of these behemoths are readymade to sustain 20-plus megawatt deals for the likes of Google, Microsoft and other tech giants. And there’s no denying that advanced analytics like machine learning voraciously consume compute resources, hence the need for more and more electricity.

But the true value of the hyperscale data center isn’t necessarily just in its size. It’s also in its flexibility. 

Less hyper, more scale

There’s no denying that the hyperscale deals are big and getting bigger, and that many colocation data centers are playing catch-up. At Sabey Data Centers, we had the good fortune of prioritizing modularity and scalability for our tenants early on and we built big to achieve that goal, which has ultimately put us in a strong position to compete in the hyperscale market.

We’ve noticed the increasing gravity of hyperscale, both in the deals we’ve won in recent years, and also in the data center industry in general. In 2018, the North Virginia area leased more than 270 megawatts of power capacity. Facebook alone accounts for nearly a third of that.

The deals aren’t just getting bigger, though. They’re also moving faster. Traditionally, data center providers had 12-18 months to move on hyperscale deals, but now these requirements are being demanded in as little as eight months in some cases. This puts strain on a construction perspective to acquire land ahead of demand, and build in anticipation of these massive deals, rather than in reaction to them.

At the same time, not everyone is Facebook or Microsoft. There are fewer than 500 hyperscale data centers worldwide, mainly because the number of organizations that need a dedicated hyperscale facility are few and far between. Rob Rockwood, President of Sabey Data Centers, put it best:

“This is a hyperscale demand market, but it’s not just a hyperscale market.”

The real challenge, and maybe the true essence of “hyperscaling,” is being nimble and modular enough to also support smaller enterprises. Flexing to support a hyperscale is one thing, but in that same building, can you cost-effectively sustain 200-500 kW customers, for example? After all, the enterprise also needs powerful, flexible connections, just on a smaller scale. Being ready to deliver a 20-megawatt solution for one client can complicate the logistics of turning around 200 kilowatts for another.

That’s why, when it comes to the ability to hyperscale, we don’t think the winners will necessarily be those who can lock down the biggest deals. Rather, it will be the providers who can lock down the biggest range of deals.

Affordable energy is key

When you think of hyperscale, Ashburn, Virginia (AKA “Data Center Alley“) might come to mind. But Sabey has witnessed growing interest in 10-plus megawatt deals at its Central Washington data centers. Why? Because the Pacific Northwest boasts some the lowest-cost, and most abundant, renewable power in the United States. With hydro-electric dams sustaining costs as low as 3.0 cents per kWh, Central Washington the lowest-priced power in the industrialized world. It is part of the reason Microsoft built one of its largest hyperscale data center facilities in Quincy, which incidentally, is also home to SDC Quincy—a Sabey Data Centers campus. 

In the coming years, hyperscale data center deals will probably get bigger and more abundant. But first, data center providers need to get smarter and more capable, specifically by finding ways to lower their total cost of ownership (e.g., building where power is cheap) and employing modular design best practices.

Contact us today to learn more about what Sabey is doing to prepare for the future. 

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