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Datacenters outlook: All eyes on Colombia?

Investments in energy efficiency and sustainability, modular and compact solutions, new edge sites, and the rise of novel regional hubs are the datacenter industry’s main trends in Latin America in 2023.

From a business perspective, further consolidations are expected next year in countries such as Brazil, Chile and Mexico, due to demand driven by hybrid cloudadoption, requiring large processing and storage capacities.

“The pandemic situation also had a strong influence, due to the need to provide quality remote access, data sharing in large volumes, etc., which increased the demand for this type of service far beyond traditional colocation,” Jesus Aro, cloud transformation and IT operations partner at KPMG Brasil, told BNamericas.

In terms of markets, Colombia seems increasingly attractive for colocation and hyperscale investors, with different projects emerging in 2023, joining Brazil, Chile and Mexico as the region’s major datacenter investment magnets.

“We are going to see in the next six months an explosion of new datacenters in Colombia. Colombia is the next big thing. Those who were already in Chile and Mexico are now discussing expansions to the country. And those that are already in Colombia are all planning major expansions. We have several projects contracted there,” Rafael Garrido, regional head of telecom and datacenter equipment provider Vertiv, told BNamericas.

Vertiv is a leading global provider for the datacenter industry. In Latin America, it supplies all main players.

Consumer market size, strategic location, and access to international data routes are among the factors driving internet and cloud companies, and with them datacenter enterprises, to Colombia.

Elsewhere, in addition to Brazil, which dominates the sector with by far the largest datacenter park in Latin America, markets such as Mexico, especially in Querétaro region, and Chile, in hotspots such as Santiago and Valparaíso, will see project expansions and new announcements.

An analysis by consulting firm Colliers highlighted Chile’s major datacenter potential, as the country is already a main hub in Latin America. 

Colliers estimated that in the next three years the area occupied by datacenters in the country will grow to 115ha by 2025. “Currently, datacenters operating in Chile occupy a total land area of 33ha,” according to the report.

The growth is driven by new projects of hyperscalers such as GoogleMicrosoft and AWS and the upcoming entry of hyperscale providers such as Odata and Scala, among others, whose first Chilean sites are ready.

Chile also enjoys good connectivity in addition to a direct connection with the US and soon with Asia through the Humboldt cable. Furthermore, the country offers a rich renewable energy ecosystem, which is increasingly becoming mandatory for the operation of datacenters.

“The industry is being extremely challenged in this regard. Everyone talks about [efficiency indicators] PUE, WUE, CUE. In the very near future we are going to talk a lot about what we coined TUE, something like Total Efficiency Unit. Because it will be necessary to combine all of this, energy efficiency, water and carbon emissions,” said Garrido.

New announcements of decentralized storage and computing projects, under edge, micro-edge or far-edge architectures, should make headlines in 2023 and beyond.

According to Dell’Oro Group’s Telecom Server report, the edge computing market is projected to reach US$14bn by 2026 globally, with Latin America claiming a slice of this pie.

“KPMG’s vision is that over the next 12 to 18 months there will be massive investments and experimentation with [edge] in sectors such as agribusiness, healthcare, mining, automotive, government (smart cities) as well as retail,” said Aro, adding the architecture is expected to mature in a more consolidated way only in mid-2024.

Overall, Latin American datacenter investments are expected to reach US$9.11bn in 2027, up from US$6.03bn in 2021, according to projections by Aritzon.

In 2023, main player Equinix projects strong acceleration of cloud service providers, infrastructure and interconnection in Latin America to support IT decision-makers to face digital transformation.

“Among the perspectives [for 2023] are the evolved digital ecosystem, greater adoption of edge computing solutions, flexible and scalable infrastructure, strategic search for technological allies, accelerated participation of cloud service providers, greater conversion of data into valuable information and end-to-end zero trust security,” regional managing director Eduardo Carvalho wrote in an analysis.

“By 2023, systems maturity and modernization will be key to success and capitalizing on digital business opportunities in the region,” he added.

A main obstacle is a growing shortage of skilled labor, which is expected to increase over the next five years as new projects are being built, Vertiv’s Garrido said. As a result, “starting in 2023,” the main players will invest in internal training and partnerships with universities to try to tackle these problems.

All in all, however, “I don’t see the datacenter market in Latin America and in Brazil with less than double-digit growth rates over the next five or six years, at least,” Garrido said.

Source : BnaAmericas