Middle East Green Data Center Market Size, Share & Industry Analysis, By Component (Solutions and Services), By User (Colocation Providers, Cloud Service Providers, and Enterprises), and Country Forecast, 2024-2032

The Middle East green data center market size was valued at USD 1.99 billion in 2023. The market is projected to be worth USD 2.29 billion in 2024 and reach USD 9.21 billion by 2032, exhibiting a CAGR of 19.0% during the forecast period.

Green data centers are IT facilities designed, built, and function according to international standards, focusing on reducing environmental impact. They comprise a range of practices and technologies that reduce energy consumption, carbon emissions, and resource use while maximizing operational efficiency and sustainability. Organizations use these centers to achieve greater resource optimization and energy efficiency, longer infrastructure life cycles, and reduced costs and carbon impact. These centers often use energy from renewable sources, such as solar and wind. The overarching goal is to have data center efficiency and environmental sustainability using smart energy approaches.

The COVID-19 pandemic accelerated the adoption of digital services, cloud computing, and remote work, leading to higher demand for data centers. This, in turn spurred interest in green data centers as companies sought to balance increased energy consumption with sustainability goals.

IMPACT OF GENERATIVE AI

Artificial Intelligence Continues to Show Increasing Benefits in the Data Center

Undoubtedly, AI has become one of the most important buzzwords in the last 12 to 18 months. Constantly attracting attention across the globe, this technology has become the dominant technology, changing people's lives and the way businesses operate. In recent years, no other technology has achieved the same hype or appeal as Generative AI. By 2024, it is clear that this revolutionary technology will dramatically impact data center construction and deployment and network architecture design in general. Generative AI can optimize cooling systems, power distribution, and workload management, reducing energy consumption. It can predict and adjust to the data center’s needs in real-time, ensuring that resources are used efficiently. Further, the Middle East’s hot climate poses challenges for data center cooling. Generative AI can enhance cooling strategies, such as dynamic airflow management and liquid cooling systems, to maintain optimal temperature while minimizing energy usage.

Thus, the integration of AI represents a paradigm shift toward more innovative, efficient, and environmentally sustainable infrastructure management.

Middle East Green Data Center Market Trends

Renewable Energy Integration and Advanced Cooling Systems Will Shift the Market Toward an Unprecedented Growth

Advanced cooling strategies in data centers, such as air conditioning and air cooling, are notoriously energy-intensive. However, recent advancements in cooling technology are setting new benchmarks for proficiency. For instance, liquid cooling systems use conductive coolants to absorb heat directly from server components, providing a more efficient heat dissipation method than traditional air cooling. This direct contact method significantly lessens the energy required for cooling, thereby reducing operating costs and improving the green data center's overall energy efficiency.

Intelligent airflow management systems show another step forward in optimizing data center cooling. Through the use of advanced controls and sensors, these systems can automatically adjust cooling resources based on real-time data center situations, such as the temperature and load of the server. This new allocation of cooling resources helps to avoid over-cooling and under-cooling, ensuring servers operate in optimal thermal conditions while minimizing power consumption. These above factors are likely to drive green data center projects at an accelerated pace.

Middle East Green Data Center Market Growth Factors

Optimizing Data Center Operations with Advanced Technologies are Driving the Market Development

In today’s fast-evolving digital landscape, the Middle East region stands at the forefront of an era defined by transformative technological advancements. As industries and businesses progressively embrace the power of digitization, data has developed as the lifeblood of efficiency, innovation, and competitiveness.

Artificial intelligence (AI) and Machine Learning (ML) are revolutionizing data center operations with the ability to analyze large amounts of operational data in real-time. These technologies can predict equipment failures before they occur, enabling preventive maintenance to avoid costly downtime and excessive energy consumption. AI algorithms optimize energy consumption across the green data center by continuously adjusting cooling systems, power distribution, and server workloads based on current demand and other variables. AI and machine learning significantly improve data center energy efficiency by identifying inefficiencies and automatically making adjustments.

For instance, Google says it has used deep learning algorithms to reduce the amount of energy used to cool its data centers by up to 40%.

In addition to operational efficiency and predictive maintenance, these technologies can be a guide for green data center design, recommending layouts and configurations that maximize airflow and minimize energy consumption. Integrating AI and machine learning into data center management represents a forward-thinking approach to achieving sustainability goals through technological innovation.

RESTRAINING FACTORS

Water Shortage and Significant Initial Investments to Hamper Green Data Center Market Growth

The Middle East green data center market growth is hindered by many obstacles that must be overcome to realize their full potential. For instance, water shortages pose a significant risk as data centers need water for cooling. This is a particular challenge for some countries in the Middle East, which rely heavily on clean water to operate data centers. As we advance, this obstacle will need to be addressed as a priority, especially since new graphics processing unit (GPU) chips used for high-performance AI need liquid cooling. Other challenges in the Middle East region include significant initial investment costs to build or upgrade data centers compared to traditional facilities, heavy dependence on fossil fuels, which account for the largest in the energy mix available across the networks powering data centers, and uninterruptible power sources, limited supply or availability of renewable energy sources.

Middle East Green Data Center Market Segmentation Analysis

By Component Analysis

Solutions Segment Led the Market Due to Increased Implementation of Cooling Systems

By component, the market is studied in terms of solutions and services.

The solutions segment held a majority market share in 2023 and is further categorized into power system, monitoring & management system, cooling/HVAC system, and networking system.

Cooling/HVAC systems contributed a majority share and are expected to grow at the highest rate during the forecast period. The Middle East’s hot and arid climate makes effective cooling systems essential for maintaining optimal operating conditions in data centers. High ambient temperatures necessitate advanced cooling technologies to ensure reliability and efficiency. Innovations in cooling technologies, such as AI-driven cooling management, advanced heat exchangers, and precision cooling systems, are enhancing the effectiveness of HVAC systems in data centers. These advancements are crucial in managing the high heat loads typical in data centers while minimizing energy usage.

The services segment is expected to rise at the highest rate during the forecast period, owing to regulatory support for corporate sustainability goals in the region. Services have been further studied for professional and managed services. As the demand for sustainable and efficient data centers increases, the market for professional services in this sector is poised for significant growth. The growing emphasis on professional certifications and training programs in green technologies is boosting the demand for skilled professionals. As more individuals become certified in green data center management, the availability and quality of professional services are expected to improve in the coming years.

By User Analysis

Rapid Adoption of Green Data Centers by Enterprises Boosted the Segment Growth

The users considered in the scope are colocation providers, cloud service providers, and enterprises.

The enterprises segment held a majority market share in 2023. Cost efficiencies, corporate sustainability goals, technological innovations, and market demand drives the enterprise users' adoption of these data centers in the Middle East. As awareness and expertise in green technologies grow and governments and stakeholders continue to prioritize sustainability, adopting green technologies is expected to increase considerably in the forthcoming years. Investors and stakeholders increasingly consider environmental, social, and governance criteria when making investment decisions. Enterprises are adopting these centers to meet electrocardiogram (ECG) expectations and attract sustainable investment.

Further, colocation providers are expected to rise at the highest rate during the forecast period. Colocation providers in the Middle East are increasingly adopting green data centers due to many factors, including smart city projects, colocation demand, and market investments. These providers offer shared data center space for multiple clients, and integrating green practices into their operations can offer numerous benefits, such as customer retention and access to incentives and subsidies for adopting green technologies, among others.  Many enterprises that use colocation services have strong corporate social responsibility (CSR) commitments, which they expect their service providers to support. Middle Eastern governments are implementing regulations and offering incentives aimed at reducing energy consumption and carbon emissions. Colocation providers are obliged to comply with these regulations and often receive financial incentives to adopt green technologies.

COUNTRY INSIGHTS

The market is divided into key countries: Israel, UAE, Saudi Arabia, Iran, Cyprus, Egypt, and the Rest of the Middle East.

Israel held majority Middle East green data center market share in 2023 as it is one of the technologically advanced markets in the Middle East region. The growth of this country is driven by elements, such as cloud computing penetration, high digitization, growing government strategies, and advanced technologies, which lead to increased demand for colocation. In 2022, in terms of investment, the Israel market held a significant share in the Middle East region. For instance,

In 2023, Amazon Web Services invested USD 7.20 billion to launch data centers in Israel. These data centers are part of AWS’s broader global strategy to expand its cloud service.

The development of industrial parks, smart cities, and other areas is contributing to the growth of the country's green data center. The government has created smart cities, such as Tel Aviv (with the AutoTel initiative), Modiin, and Jerusalem, contributing to the development of the country's industrial zones. Additionally, the market has begun to focus on sustainability by adopting renewable energy. For instance,

In the first half of 2022, domestic renewable energy production reached about 5.7 TWh, of which 95% was generated from solar power.

UAE is expected to grow at the highest rate during the forecast period. Higher social media and Internet penetration across the country, latest developments in AI and other technologies, the roll-out of 5G services, improved indoor connectivity, and other similar factors make the UAE market. Further, the UAE has pledged to be carbon neutral by 2050, becoming the first country in the Middle East to initiate this project. The country has been at the forefront of adopting sustainable fuel and green energy sources for their energy needs.

KEY INDUSTRY PLAYERS

Key Players Emphasize Advanced Green Data Centers to Strengthen their Positions

Prominent players in the Middle East green data center market are Schneider Electric, Siemens AG, Equinix, Gulf Data Hub, and Vertiv Group Corp., are expected to dominate the market. They are focusing on offering solutions for users, including colocation providers, cloud service providers, and enterprises. Additionally, they focus on developing and expanding their green data centers by integrating innovative technologies, such as artificial intelligence (AI), machine learning (ML), and more.

List of Top Middle East Green Data Center Companies:

• Schneider Electric (France)


• Huawei Technologies Co., Ltd. (China)


• Vertiv Group Corp. (U.S.)


• Equinix (U.S.)


• Siemens AG (Germany)


• Atos SE (France)


• Lenovo (China)


• Etisalat (UAE)


• Rittal GmbH & Co. KG (Germany)


• Gulf Data Hub (Dubai)

KEY INDUSTRY DEVELOPMENTS:

• April 2024: Siemens Smart Infrastructure expanded the Siemens Xcelerator partner ecosystem to embrace Maschinenfabrik Reinhausen's TESSA APM suite of transformer and switchgear condition monitoring and management applications


• December 2023:  Vertiv acquired CoolTera Ltd., a provider of liquid cooling solutions for high-density computing/AI. The addition of CoolTerra further strengthens Vertiv's expertise in high-density cooling solutions and enhances its ability to serve global data center customers and their needs for AI at scale.


• September 2023: Huawei announced the opening of a cloud data center in Saudi Arabia's capital, Riyadh, as part of its efforts to expand online services in the Middle East. The new Riyadh data center will provide a range of cloud services, including infrastructure, big data, artificial intelligence, and databases.


• May 2023: Equinix, Inc. announced the opening of its third International Business Exchange (IBX) data center in Dubai. This new location, DX3, will offer capacity for 1,800 cabinets in two phases, with a total area of ​​12,000 square meters, making it Equinix's largest data center in the region.


• March 2021: Moro Hub, ​​the digital arm of Dubai Electricity and Water Authority, deployed Google Cloud's Anthos from its solar-powered green data center in the Middle East in partnership with Atos. Google Anthos is a hybrid multi-cloud platform that enables cloud migration, application modernization, multi-cloud, and hybrid cloud management.

REPORT COVERAGE

The study on the market includes prominent areas across the world to help the user get a better knowledge of the industry. Furthermore, the research provides insights into the most recent market trends and an analysis of technologies that are being adopted quickly across the world. It also emphasizes some of the growth-stimulating factors and restrictions, allowing the reader to obtain a thorough understanding of the market.

REPORT SCOPE & SEGMENTATION