‘Software is eating the world,’ once said by Mark Andersson, has become a reality for almost everyone. We are spending more and more of our daily lives online, from our daily work and social interactions to consuming news and entertainment. To support these activities for billions of people, terabytes of data need to move between locations across the globe, which is managed by large data centers. To give an estimate, data center electricity demand has increased from nearly 300 TWh in 2019 to almost 500 TWh in 2024 (more than 2% of total consumption). This significant growth reflects the underlying trend of digitization. Currently, there are more than 8,000 data centers worldwide, with about 40% in the USA, 16% in Europe, and close to 10% in China.
India’s data center market has seen significant growth in the last five years. India's data center capacity accounts for around 3-4% of the global market share and is expected to reach around 1.4 GW by the end of 2024. Of that capacity, Mumbai will hold almost 44% of the market share, followed by Chennai (22%) and NCR (7%). Although currently concentrated in Tier 1 cities, major companies are exploring opportunities to build data centers in Tier 2 cities as well.
Opportunity for Lubricant companies
Data centers have huge operational costs and a critical maintenance schedule to minimize downtime. Electricity consumption, a major cost component, is driven by two factors: computing, which accounts for almost 40% of consumption, and cooling requirements for hardware stability and efficiency, which account for another 40%. Other equipment, such as storage, power distribution equipment, and IT peripherals, make up the remaining 20%. Although the majority of data centers currently operate with air-cooled technology, there is growing interest in liquid-cooling technology. Here are primary liquid cool technologies prevalent in the market in order of adoption rate:
Rear-Door Heat Exchangers: These replace the rear door of IT racks with liquid heat exchangers, working alongside air-cooling systems to manage varying rack densities.
Direct-to-Chip Liquid Cooling: Cold plates are placed on heat-generating components to draw off heat, removing about 70-75% of it, while the remaining 25-30% is managed by air cooling.
Immersion Cooling: Servers are submerged in a special liquid that conducts heat, eliminating the need for air cooling. This method is highly efficient and optimizes thermal transfer.
One of the major trends across the data center industry is increasing rack density. Rack density refers to the amount of computational equipment stored in a single server rack. This allows data centers to increase their operational capacity without requiring additional real estate. However, as rack density increases, it becomes difficult for air-cooled technology to keep up, leading to greater adoption of liquid cooling technology. Estimates suggest that liquid cooling can reduce power consumption by more than 50%. Due to these advantages and sustainability initiatives, many companies are actively implementing and exploring liquid cooling technologies.
Potential market size in India
India’s data center market is significantly underpenetrated and will continue to experience growth in future due to available talent pool, lower costs, increasing digitisation and improved infrastructure. Currently, India’s data center coolant market is limited due to dominance of air cooling technology. In future, the market size will depend upon adoption of advanced cooling technologies such as immersion cooling.