State of the market – data centres in Spain

The time is now

With the cloud computing market in Spain expected to grow at around 13% CAGR¹ reaching US$4.1 billion by 2026, the country is understandably keen to capitalise on this potential and for Madrid to live up to its post-Brexit moniker of the ‘New London’.

This summer Amazon Web Services (AWS) confirmed it was bringing forward its 10-year investment plan of €2.5bn in Spain – one of the largest infrastructure investments the country has ever seen – with the aim for this new region to be available ahead of schedule in mid-2022.  

In the race for infrastructure and provision for cloud computing providers, this is just one example of how Spain is rapidly establishing itself as one of the hottest emerging markets with the Iberian Peninsula staking the claim as the place to be. 

One of RLB’s Data Centre experts, Daniel Gomez, attended the recent DCD España conference in Madrid where the critical factors underpinning the huge growth in Spain were explored. Below Daniel summarises these topics from connectivity to renewable energies to the government’s ambition to attract and support inward investment and explains why this combination is providing an extremely attractive proposition and marking Spain as a market to watch.

Connectivity, connectivity, connectivity

We all know there is a big push by cloud providers to deploy network and content caching nodes in more places around the world, helping companies to extend their IT operations to the digital edge through the interconnection of people, locations, clouds and data. The Iberian Peninsula is fast becoming an essential hub on the global connectivity map due to its physical location between Africa, Mediterranean Europe and Northern Europe with the majority of data centres located in and around Madrid, Barcelona and Valencia. Madrid is certainly where most of the action is concentrated currently, this is due to the core fibre optical connexion which is now very developed. However, with infrastructure potentially developing in other regions to meet the required demand of data centres, it will be interesting to see how this dynamic changes as investment spreads to other areas such as Zaragoza, where AWS is preparing one solar plant of two renewable energy projects it has in Spain to serve its data centres.

Spain’s prime position on the global connectivity map is also supported by the great connections the country has through submarine cables which can be found in the south, connecting Europe to Africa; and in the north, connecting Europe to America.

Green energy provision driving investment

Another of the major attractions of the Spanish market is the high availability of renewable energies – the country currently runs on 53%² renewable or green sources. And this attraction will only increase with the Spanish Government set to install 50 GW of renewable energy by 2030 as part of its National Integrated Energy and Climate Plan.

Data centre companies need to obtain renewable energy credits to prove that they are using renewable energy. Thanks to the availability and access to renewable energy sources in Spain this process is easier than in other countries. So, it is no surprise that the region is receiving interest and long-term investment from hyperscale firms, such as Microsoft, Google and AWS with ambitious sustainability goals to meet.

Supporting inward investment

The Spanish Government is certainly focused on cementing its position as being at the forefront of digitisation transformation in Europe. Spain has a massive interest in cloud provision. Its own Public Administration is in need of an upgrade to its IT services in order for it to manage the implementation of new digital infrastructure such as its plans to develop 5G rural.  To support this, it is likely that European Funding will be used to improve the Public Administration infrastructure to enable it to meet this ambition.

And it’s not just supporting its domestic infrastructure, the Spanish Government also recently announced a commitment to invest US$720m³ in developing Artificial Intelligence to incorporate into its data centre market. This investment also secures the local governments’ transaction to the cloud system and working methodology which will improve regional connection and attract further investment.

RLB is striking the balance between international best practice and local market expertise, working collaboratively with the local knowledge of the market and regulations, we are currently in partnership with local consultancy firms. I am relocating from our DC Centre of Excellence in London to Spain shortly to facilitate and increase our team of experts in the region where we provide Design Management, Project Management, Programme Management, Integration Project Management and Cost Management services.

And the challenges

As with all rapidly emerging markets, with great opportunity there inevitably come some challenges and lessons to learn. As the data centre market in Spain is still fairly new, it is continuing to fully understand the procedures that the largescale international digital companies are imposing, including the requirements to become environment friendly.  So, within the build it is essential to marry these requirements with the knowledge of local design regulations which are very specific to the region. The successful projects will be those that set a good procurement route from the start forming a build team that combines global data centre technical knowledge with local contractor expertise.

As a leading global construction and management consultancy specialising in data centres, RLB’s strategic position is to provide support to the market, understanding its challenges and how to react and respond to them. RLB has experience mitigating and supporting many firms across their projects globally and providing specific local advice. For example, we are assisting Equinix in Madrid and Barcelona on one recent challenge around the procedures for valuation of the works and payment approval based on the Spanish system, where the “Direccion Facultativa” needs to sign off the works completed and claimed in the interim valuations.

With the global demand for cloud provision only set to continue to soar, the need for large scale data centres is only going to increase. With the digital mega companies such as Google, Microsoft and AWS battling for the best location in their drive to deliver, Spain is definitely riding high as part of the next wave of cloud data centre deployment with many of the leading developer companies such as Equinix, Interxion (Digital Realty) and NTT already established in the country and increasing their service offer.

1 – Research and Markets at GlobeNewswire

2 – Red Eléctrica de España (REE)

3 – EL PAÍS