London losing lustre as data-centre destination

High lease prices, limited space and a lack of power may be combining to make the capital increasingly unattractive as a data-centre location

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 has claimed there is a lack of growth in new data centres, compared to demand, in London. The company said the capital only has about five percent capacity for data-centre space, forcing lease prices up by 60 percent 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."

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 chief operating officer Dave Boswell said the Isle of Man data centre's ability to deliver up to 30kW per rack is far greater than what could be offered in the short term at a London facility.

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

Boswell told sister site "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 it 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," Boswell added.

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, large data-centre providers have admitted that there are some short-term power supply issues but claimed that this is not a problem in terms of 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, processing information for government departments and major players in the finance, telecommunication and retail industries.

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."

"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," Singh continued.

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

TelecityGroup's 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."

The spokesman 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. 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 [the 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," the spokesman said.

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 [the Olympics] are not delaying any other projects."

The spokesman advised businesses to contact EDF Energy early as to when it expects its power demands to increase.