Published September 22, 2023 | 3 min read
Key Points
- Datacenter advancements are facilitating a shift away from traditional air-cooling systems to liquid cooling solutions which promise greater efficiency and reduced costs.
- Secular market drivers include the rise of Generative AI and surging digital growth across a wide range of sectors including retail, cybersecurity, finance, healthcare and education.
- Despite increased upfront costs for installing the tech, the long-term benefits are becoming increasingly clear amid rising energy costs and the limitations of traditional HVAC solutions.
- The liquid cooling space is at an early stage of development, however key players in the space are poised to benefit from an emerging industry with major growth potential.
Our era of rapid digitization is fueling increasing demand for ever-greater computational power. Datacenters now need to meet the demands placed on them by an expansion of data storage and enhanced processing requirements. More sophisticated IT systems require greater power consumption, and this means increased heat output.
“The advantages of liquid cooling are particularly relevant at a time of rising energy costs and increased awareness of ESG concerns.”
The report reveals how the traditional HVAC (Heating, Ventilation, and Air Cooling) air cooling systems that currently serve the majority of datacenters could be reaching the limits of their efficacy as they struggle to handle advanced processing power and deliver reductions in both costs and storage space. An alternative solution could come in the form of liquid cooling systems that offer enhanced cooling power, greater energy efficiency and reduced operational costs compared to HVAC solutions. The advantages of liquid cooling are particularly relevant at a time of rising energy costs and increased awareness of ESG concerns.
A new wave of datacenter evolution
“A rise in ESG concerns, spearheaded by increased governmental oversight, is also increasing scrutiny over the environmental impacts of data processing and storage.”
A number of secular market forces are influencing the rise of liquid cooling solutions. The shift to digitization of recent years shows no signs of slowing, leading to data proliferation in sectors as diverse as retail, cybersecurity, telecommunications, financial services, healthcare and education.
Rapid growth in artificial intelligence (AI) across the board also requires greater processing power, which in turn necessitates greater cooling capabilities. Although traditional HVAC firms have been making advancements, there are physical constraints to the effectiveness of these applications; constraints that liquid cooling is well-placed to overcome.
Rising electricity prices also demand a greater emphasis on cost-effective cooling solutions. At the same time, there is a growing need to offset the costs of the increasing physical footprint of datacenters. We are therefore seeing a shift towards higher density data storage solutions that seek to optimize existing space; this, again, leads to increased heat output.
A rise in ESG concerns, spearheaded by increased governmental oversight, is also increasing scrutiny over the environmental impacts of data processing and storage. The US and China have plans to limit the power usage effectiveness (PUE) of datacenters, and Europe’s largest operators have opted to self-regulate their PUE limits in anticipation of new sustainability rules in the region.
Liquid cooling is on the rise
“Despite higher upfront costs, the technology offers superior thermal transfer properties and greater cooling capacity compared to air-based cooling and ventilation.”
We are still in the relatively early stages an accelerated period of digitization in which enhanced computing power is becoming commonplace and the questions of cost effectiveness and sustainable energy use are pressing items on the global corporate agenda. The current size of the liquid cooling market stands at around $2-$3 billion, representing around 5% of the overall datacenter cooling market, and is projected to increase at more than a 25% CAGR in the coming years.
Despite higher upfront costs to install liquid cooling systems, the technology offers a number of tangible benefits; including superior thermal transfer properties and greater cooling capacity compared to air-based cooling and ventilation. One liquid immersion cooling specialist believes the technology could reduce total datacenter energy use by up to 50%.
“Liquid cooling solutions could reduce operating costs by 40% compared to air cooling and enhance GPU performance by 40%.”
Liquid cooling also removes the need for energy- and space-intensive cooling fans; the pumps required to facilitate liquid cooling are much less power-hungry. Japanese technology giant, Fujitsu, believes this decreased need for cooling fans could reduce CO2 emissions by as much as 60%, while another leading immersion cooling specialist believing its solutions could reduce datacenter water use by 50%. As a result, this technology could save up to 300 billion liters of water per year in America alone.
The report also reveals how liquid cooling solutions could reduce operating costs by 40% compared to air cooling and enhance GPU performance by 40%, alongside an 80% reduction in the physical footprint of datacenters. The end result could be a reduction in capital expenditure by almost one third and a 32% decrease in the total cost of ownership.
Powerful opportunities for a growing sector
Although the liquid cooling market is in its early stages, the report identifies a mix of public and private manufacturers and other companies at the forefront of this emerging sector; as well as the three liquid cooling technologies that will be central to the growth of the market and the companies well-placed to lead in each vertical. This emerging sector is set to benefit from the surge of digital growth that has defined the post-pandemic era, as liquid cooling solutions likely play a pivotal role in the evolution of datacenters worldwide.
Deane Dray authored “RBC Imagine™: Datacenter Liquid Cooling Market Overview.” published on June 21, 2023. For more information about the full report, please contact your RBC representative.
