Data Center Considerations for Government Stimulus in a Post COVID-19 World
A “new normal” to guide decisions
The unprecedented global economic slowdown from COVID-19 has caused governments to rightly address the looming health risks and procure trillions to stabilize their countries’ economies. Beyond the fog of the pandemic and physical distancing, people will soon be thrust into a new world, one where companies would have adjusted to digital and remote workplaces and even further government stimulus might be required to restart economies. The approaches governments and markets take to stimulate economic growth will have long-lasting effects, so care needs to be taken in selecting where to invest.
The impact on data center construction
According to recent estimates, the construction of new data centers across the globe will reach a value of $73.9B (USD) by 2021, a compound annual growth rate of 8.61 percent since 2017. The advent of COVID-19 threatens to stunt this growth, right at a time when core demand is the highest it has ever been and accentuated by a world realizing how dependant we are on connectivity.
Data center construction sites in many parts of the world are shutting down or significantly diminished as a result of lockdowns and orders to shelter-in-place. Additionally, restrictions on movement put the construction industry’s supply chain at risk, especially if Tier I or Tier II suppliers have to pause production during the containment period. For instance, Facebook recently announced that construction has halted on its Huntsville, Alabama and Clonee, Ireland data centers “to protect the health and safety of people who work on our construction sites and the wider community during the COVID-19 outbreak”.
As governments are contemplating their current and post COVID-19 stimulus plans, addressing the effects on essential sectors such as construction and ensuring the health and viability of the supply chain will be critical to future success. In order for economies to rebound once the threat of the pandemic subsides and social distancing restrictions are lifted, it will be crucial that people have jobs to return to and for companies to still exist. For specific sectors such as construction, a failure to address key challenges will prolong the recovery and threaten the ability to keep up with the escalating demand. This is particularly important for data centers that play a critical role in maintaining a safe and secure digital infrastructure.
The commitment to sustainability
Another guidepost for economic stimulus investment is doubling down on sustainability measures and commitments. Governments should be wary of making decisions that, in an effort to boost their economies, trade one global crisis at the expense of exacerbating another one, namely climate change. Increasing amounts of evidence proves that pursuing low-carbon and climate-resilient growth is the best way to unlock lasting economic and social benefits. Therefore sustainable, low-carbon infrastructure must be central to any government-led stimulus in response to the COVID-19 outbreak. Governments have a critical role to play in setting out robust, well-articulated and sustainable investment strategies.
Here again, modern data centers have set the standard toward clean energy with the goal of achieving net-zero carbon emissions by 2050 or sooner. There continues to be more and more evidence that pursuing low-carbon and climate-resilient growth is the best way to unlock lasting economic and social benefits.
For now, let's think about the future
In the immediate term, economic activity is being significantly disrupted by direct government intervention in order to limit the spread of the virus. However, when we set our minds to restarting the economy, instead of stimulating demand, investments in infrastructure such as low-carbon data centers will become essential. Given the government’s ability to borrow at near-zero interest rates, it makes the impending deficits more palatable.
If we approach these investments in a thoughtful manner, we can boost employment, wages, and overall economic production while at the same time making the environment a priority. This combination will set the stage for increasing prosperity for years to come.