Carbon Neutral Data Center Market Size, Share, Analysis, Trends, Growth, Forecasts, 2032

Carbon Neutral Data Center Industry Prospective:

The global carbon-neutral data center market size was worth around USD 7.85 billion in 2023 and is predicted to grow to around USD 43.63 billion by 2032 with a compound annual growth rate (CAGR) of roughly 21.00% between 2024 and 2032.

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Carbon Neutral Data Center Market: Overview

Carbon-neutral data centers are facilities that aim to reduce or manage carbon emissions released from data centers leading to climate changes globally. These centers focus on helping the world, specifically, the digital industry, achieve net zero emissions. Data centers are defined as units that specialize in physically storing company-related data and applications. These facilities consist of an extensive network of storage and computing resources that allow sharing of information and applications. The main pillars of a data center are application-delivery controllers, storage systems, firewalls, switches, routers, and servers.

Since data centers deal with a large number of electronic devices connected to each other, they have to be connected to a constant source of high-intensive energy that powers the devices and the cooling systems deployed to prevent overheating. Hence, data centers are considered significant contributors to greenhouse gas emissions which in turn are the leading causes of global warming and other unpredictable changes in the climate conditions across the globe. The demand for carbon-neutral data centers has grown at a tremendous rate in the last few years as more regions worldwide are focusing on reducing carbon emissions. During the projection period, the industry for carbon-neutral data centers will witness a steady growth rate.

Key Insights: 

• As per the analysis shared by our research analyst, the global carbon-neutral data center market is estimated to grow annually at a CAGR of around 21.00% over the forecast period (2024-2032)
• In terms of revenue, the global carbon-neutral data center market size was valued at around USD 7.85 billion in 2023 and is projected to reach USD 43.63 billion, by 2032.
• The market is projected to grow at a significant rate due to the rising investments in renewable energy across the globe
• Based on the data center type, the hyperscale data centers segment is growing at a high rate and will continue to dominate the global market as per industry projection
• Based on the industry, the IT & telecom segment is anticipated to command the largest market share
• Based on region, North America is projected to dominate the global market during the forecast period

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Carbon Neutral Data Center Market: Growth Drivers

Rising investments in renewable energy across the globe will drive the market demand

The global carbon-neutral data center market is expected to grow owing to the increasing investments in renewable energy across the globe. As access to clean energy such as solar and wind grows, more companies are likely to adopt renewable power sources for supplying energy to data centers. Until a few years ago, renewable energy investments were highly limited and expensive. However, the last decade has witnessed an exponential increase in technologies that can harness solar, wind, and hydropower.

In February 2023, India announced the approval of a USD 3.9 billion investment that will be directed toward constructing a new hydropower plant near China’s border. The facility is expected to deliver 2,880-megawatt energy upon completion. In January 2024, Europe witnessed the launch of a new 20,000-square-meter plant as the company Satinal Spa aims to strengthen its hold in the photovoltaic market. The growing construction of off-shore power plants will further amplify the production rate of renewable energy thus allowing higher access to clean energy sources. Market research suggests that China is a leading contributor to Africa’s green energy future and such international collaboration will continue to help the renewable energy market flourish further.

Intensifying stringency by regional governments to promote decarbonization or carbon neutrality will add to the existing market revenue

The regional governments worldwide are expected to help change carbon emission rates emerging from industrial and commercial units. Regulatory bodies globally have intensified laws and protocols related to the permissible rate of carbon emissions from industrial units thus helping the global carbon-neutral data center market grow. For instance, in April 2024, the United States Environmental Protection Agency (EPA) launched new rules focusing on pollution-causing power plants. The law mandates that existing coal and new gas plants must reduce carbon emissions by 90% by the end of 2032.

Carbon Neutral Data Center Market: Restraints

High cost of investment could restrict the market expansion rate

The global industry for carbon-neutral data centers is projected to be restricted due to the high cost associated with the development of carbon-neutral centers. Apart from the initial high expense of developing a data center, the deployment of clean energy or other means to mitigate greenhouse gas emissions further escalates the total pricing of the structure. Other factors complicating the market are related to the limited commercial adoption of the carbon neutrality concept in data centers especially in countries with weaker laws regarding carbon emissions or lack of implementation policies. 

Carbon Neutral Data Center Market: Opportunities

Growing number of companies adopting technologies to neutralize carbon emissions in data centers will generate higher growth opportunities

The global carbon-neutral data center market will generate high growth opportunities due to the rising number of companies experimenting with new materials and technologies to neutralize carbon emission rates across data centers. For instance, Amazon Web Server (AWS), a leading provider of cloud computing solutions, is currently investing in building data centers using lower-carbon materials including concrete and steel. AWS has pledged to achieve net-zero carbon by 2040 as it continues to invest in environmentally-friendly structures. In February 2024, Bharti Airtel’s data center, Nxtra, announced a partnership with Ampln and Amplus Energy. Through this relationship, the former will get its hands on an additional 140,208 MWh (megawatt-hour) of renewable energy for its data centers. Such initiatives are expected to encourage more data center developers to adopt green initiatives and manage carbon emissions.

Increasing investments in novel technologies for carbon emission management holds high growth opportunities

Since more industries are depending on new solutions for reducing or mitigating carbon emissions, solution providers are actively adopting novel approaches and delivering high-performance remedies. Hydro, a leading decarbonizing solution provider, announced an investment of EUR 180 million for the construction of a new aluminum recycling plant equipped with state-of-the-art technologies. The company provides low-carbon aluminum to industries thus contributing to the global carbon-neutral data center market.

Carbon Neutral Data Center Market: Challenges

Fluctuations in the supply of renewable energy and limited energy-storing capacities will act as crucial challenges

Data centers using renewable energy may face challenges in ensuring a continuous supply of clean energy as at present, the infrastructure supporting renewable energy production has not reached its true potential. Moreover, energy storing solutions currently available in the market lack exceptional performance in terms of energy storage since renewable energy can be highly unpredictable in terms of supply thus further complicating the market growth trend.

Carbon Neutral Data Center Market: Segmentation

The global carbon-neutral data center market is segmented based on data center type, solution, industry, and region.

Based on data center type, the global market segments are colocation data centers, enterprise data centers, hyperscale data centers, and others. In 2023, the highest demand was observed in hyperscale data centers since this variant of the facility is well-adopted by technology giants such as Google and Amazon. The rising focus of technology giants on reducing carbon emissions will fuel the segmental demand. As per market research, digital companies contribute to over 3.69% of total greenhouse gas emissions.

Based on the solution, the global carbon-neutral data center industry is segmented into software & platforms, hardware, and support services.

Based on industry, the global market divisions are manufacturing, healthcare, government & public sector, banking, financial services, & insurance (BFSI), IT & telecom, and others. In 2023, the leading contributor to the market revenue was the IT & telecom sector. The growing number of digital companies along with higher investments in constructing robust data center infrastructure promotes the segmental revenue. Google’s data center is estimated to be constructed over 352,000 square feet of area.

Carbon Neutral Data Center Market Report Scope

Carbon Neutral Data Center Market: Regional Analysis

North America to generate the highest revenue during the projection period

The global carbon-neutral data center market will be dominated by North America during the projection period. The growing regional government’s emphasis on decarbonizing the digital industry along with other sectors is the primary reason for a higher regional market growth rate. In March 2024, the U.S. Department of Energy (DOE) announced an investment of USD 6 billion to be used toward 33 projects in 20 states with the aim to decarbonize energy-intensive industries. Moreover, the investments will be used to reduce greenhouse gas emissions.

The US is the technological center of the world with pioneering technology giants originating in the country. It is marked by the presence of companies such as Amazon, Google, Meta, and others. In January 2024, Google announced an investment of USD 1 billion for the construction of a new data center in the UK. The company aims to make the facility carbon-neutral by 2030. Additionally, Google is also expected to invest USD 35 million in carbon capture technologies. Europe will register massive growth during the forecast period. Europe is one of the leading regions with serious policies that aim to reduce carbon emissions by 2050 and these initiatives will help the regional market thrive.

Carbon Neutral Data Center Market: Competitive Analysis

The global carbon neutral data center market is led by players like:

• Facebook (Meta)
• Microsoft
• NVIDIA
• Google
• IBM
• Green House Data
• Switch
• Amazon Web Services (AWS)
• QTS Data Centers
• Apple
• Iron Mountain
• Salesforce
• CyrusOne
• Equinix
• Digital Realty

The global carbon neutral data center market is segmented as follows:

By Data Center Type

• Colocation Data Centers
• Enterprise Data Centers
• Hyperscale Data Centers

By Solution

• Software & Platforms
• Hardware
• Support Services

By Industry

• Manufacturing
• Healthcare
• Government & Public Sector
• Banking
• Financial Services, & Insurance (BFSI)
• IT & Telecom

By Region

• North America
  • The U.S.
  • Canada
• Europe
  • France 
  • The UK
  • Spain
  • Germany
  • Italy
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • Southeast Asia
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• Middle East & Africa
  • GCC
  • South Africa
  • Rest of Middle East & Africa