Power shortages squeeze London's data centres

News analysis: Can the capital cope with demand?

Power supply issues and soaring lease costs in London are being blamed for forcing companies to look outside the M25 when building new data centres.

Accenture claims the lack of growth in new data centres, compared to demand in London means the capital only has about five per cent capacity for data centre space, forcing lease prices up by 60 per cent and making it increasingly unattractive as a data centre location.

John Cole, senior executive with Accenture's technology consulting practice, said: "The high prices and limited availability have led firms to consider locating their data centres outside of London."

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One company that has gone down that route is Netcetera, which has been building data centres for 11 years but is considering winding down its four London-based operations as it puts the finishing touches to a new 700-server-rack data centre on the Isle of Man.

Netcetera COO, Dave Boswell, said the new Isle of Man data centre's ability to deliver up to 30kW per rack is far greater than what it could offer in the short term at a London facility.

He said modern telecommunication equipment means alternative locations such as Birmingham, the Isle of Man or Manchester could more easily offer high performance at a cheaper price than London counterparts.

Boswell told silicon.com: "A lot of existing London data centres were built with 1kW or 2kW racks…but nowadays that is just not good enough. You can not add more racks to existing centres because there is no power for it and businesses' building data centres have been told by EDF Energy that they cannot supply what they need this side of the Olympics.

"This temporary Olympic blip and the ageing infrastructure in London are creating the need for data centres elsewhere. We expect that we will wind down our London data centres over the next few years."

In reality, alternative locations to London are limited because most new data centre sites need to be close to customers, many of whom are based in the Square Mile or Docklands.

Accenture's Cole said: "Until the technical constraints can be overcome the majority of firms will still look to place any new data centre sites within 100km of existing data centre sites, and close to their user base to limit performance degradation."

The well-established big data centre providers admit there are some short-term power supply issues but claim this isn't a problem in growing their data centre operations in the capital.

BT leases 6,000 square metres of data centre space within London, and 27 data centres across the UK, where it processes information for government departments and major players in the finance, telecommunication and retail industries.

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Harkeeret Singh, head of data centre strategy at BT, said data centre growth is possible in London but limited power supply means new centres need to be planned six to 18 months in advance.

He said: "The power companies do not have the power available immediately. People have got to accept there is a long lead time required to make provision for power consumption.

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"In the short term there is a lack of supply of data centres but there are a lot of developers bringing on space in the next couple of years."

TelecityGroup is a major provider of data centres, running 18 centres across Europe - seven in London - and will complete two further centres in London and Amsterdam this year.

Its customers include Virgin Radio, T-Systems and Transport for London.

A spokesman for TelecityGroup, said: "There is a big infrastructure commitment coming into the Olympics. It might be a limiting factor for companies without the necessary experience to build a data centre in London."

He added: "But we have not found it to be a problem, it is all about having the right planning and relationships in place in advance."

He said that customer demand for data centres based in London remained high, fuelled by a desire for low latency and co-location with existing offices.

The electricity supply for London is provided by EDF Energy Networks and a spokesman for the supplier said the company is projecting an investment of about £2bn in its three networks between 2005 and 2010 and completes 100,000 new connections to its networks each year.

The EDF spokesman said: "The company takes into consideration future load growth, something particularly important in areas of rapid expansion such as the City of London and Lea Valley.

"This is why we work closely with organisations such as Berr [Department for Business, Enterprise and Regulatory Reform], the Greater London Authority, the Corporation of London and large developers to ensure we have an understanding of future demands and their requirements regarding any power needs."

He added: "We operate the network in compliance with our licence and also have robust monitoring equipment which tracks the demand for power and indicates where reinforcement is necessary - long before it becomes an issue. Our works in connection with 2012 [Olympics] are not delaying any other projects."

He advised businesses to contact EDF early on when it expects its power demands to increase.