From generating valuable insights to fueling innovation, data is one of the most valuable assets. As such, data centers have had continuous growth for decades, and the region is investing heavily in IT infrastructure and data centers. 

According to market researcher Arizton, there are 24 operational data centers in Saudi Arabia with a capacity of 123MW, and 37 more facilities are on the way. Meanwhile, according to research firm DC Byte, the UAE has 52 data centers with a capacity of 235MW.

“Data and making data useful powers the unlimited potential of digital economies, transformations, and applications,” says Kamel Tawil, Manager Director MENA at Equinix. “And data centers are at the core of that digital infrastructure.” 

AI IS A GAME CHANGER

While AI is becoming integral to businesses and societies, it is also having a massive impact on data centers. Data centers now have to evolve to accommodate the unique requirements of AI 

workloads—high-performing computing, massive storage capacity, and ultra-fast networking—something the region doesn’t yet have.

“AI data centers are a wholly different beast to cloud ones,” says Henry Sutton, Founder of Gulf Data Centre Association (GDCA). “The GCC and the Middle East region is currently on a really big ‘cloudification’ journey, but AI is coming fast on its heels and will require facilities that are easily ten times larger.”

The accelerated adoption of AI, whether it is training AI models or using GenAI features like ChatGPT, calls for exponentially more storage capacity in data centers. 

“You need a lot of data center capacity for cloud and AI, which we simply don’t have in place today in the region,” adds Sutton. “For instance, if someone in the region asks ChatGPT a question, it’s going all the way to a data center on the West Coast of the US to get the answer before boomeranging back to the GCC. The industry is trying to build more regional data centers to allow more services to be provided locally rather than relying on facilities abroad. This not only reduces traffic on already busy subsea cables, but it also significantly reduces costs.”

According to a PwC report, AI is expected to boost the Middle East’s economy, injecting an estimated $320 billion by 2030. Countries in the region are racing to become AI hubs. In March, Abu Dhabi announced the launch of an AI investment firm targeting deals in AI and semiconductors that it hopes will exceed $100 billion in the next few years, while Saudi Arabia is planning to allocate $40 billion in AI investments.

ENORMOUS POWER DEMAND

This demand for data centers requires an enormous power supply. Thousands of computers must be operating to run data centers in the region and worldwide.

It is estimated that data centers accounted for up to 1.5% of global electricity use in 2022 and are responsible for 1% of energy-related greenhouse gas emissions, according to the International Energy Agency (IEA). These numbers are expected to rise as data centers adapt to AI workloads. The IEA forecasts that global data center electricity demand will double from 2022-2026, with AI playing a major role in that increase.

“Global computing produces more carbon emissions than global aviation every year,” says Sutton. “The power usage is enormous, and no one’s really aware of how bad the internet is for the environment.”

With servers using so much energy, cooling becomes paramount, especially in the GCC, where temperatures can easily reach 50 degrees during summer. Data centers like Equinix, therefore, rely on liquid cooling, a method that cools high-density racks and is seen as a more sustainable alternative to air cooling.

“So, what we are doing in our facility is integrating new cooling methods, like liquid cooling,” says Tawil. “We’re using water to cool these servers to reduce the amount of energy use, which is also very important for sustainability.”

Energy sources may be cheap and accessible in the region, but sustainability is also emerging as a key concern. As more investors and customers prioritize green energy solutions and ESG investing, data centers must embrace energy-efficient principles.

“Any data center project starting today in the GCC must understand that its customers will want renewable power or a solution for renewable power next year and the year after,” says Sutton. “So, it’s not one that you can hide away from. You have to have a solution.”

INVESTMENTS POURING IN

As the region competes to become a technology and innovation hub, investments are being poured into data centers.

It was recently announced that G42, UAE’s AI firm, and Microsoft will set up two new AI data centers in Abu Dhabi. Meanwhile, Saudi Arabia has attracted $10 billion in investments from Amazon and other tech companies to build data centers.

Sherif Lotfy, a business management consultant and an IT veteran, sees that demand for data centers will only increase as more businesses, enterprises, and startups rely on them to store and harness their data. “There is a massive need for this type of service,” he says. “Markets like Saudi Arabia, UAE, and Egypt are eager to bring those big data centers in the region, such as Amazon, Google, Meta, and Microsoft. And this is a massive investment.”

As more data centers are built, a skilled workforce becomes crucial. Network engineers, facilities managers, production leaders, and other types of technicians are needed to run data centers. However, there is a shortage of skilled talent in the region. 

“There’s a huge lack of resources,” says Lotfy. “AI, data analytics, and cyber security are three areas tremendously underserved in our region. If you look at only one aspect, cybersecurity, that’s a field that changes daily. You have to be up to date all the time; you cannot miss a piece of information because one small gap in a security breach can result in significant losses for business and customers.”

Despite this setback, global data centers and investors aren’t shying away from the region.