As the digital landscape continues to evolve, the demand for data centres is growing exponentially. Companies worldwide increasingly rely on cloud computing, edge computing, and 5G technologies, which have put enormous pressure on the infrastructure supporting these operations. One crucial aspect of this infrastructure is the power distribution system, particularly the low and medium-voltage switchgear solutions that ensure the safe and reliable delivery of electricity. This article will explore the future of DC buildouts, the strategies of leading OEMs, and the evolving relationships between manufacturers, assemblers, distributors, and end customers.
1. The Growing Demand for Low and Medium Voltage Switchgear in Data Centres
Data centres have become the backbone of the modern digital economy, providing the infrastructure for cloud computing, big data storage, and internet connectivity. As digital consumption continues to increase, so too does the power demand. To maintain operations at peak efficiency and reliability, data centres require robust power systems that manage electrical distribution efficiently.
Low and medium voltage (LV and MV) switchgear is essential in this context. These systems are pivotal in controlling, protecting, and isolating electrical equipment in data centres, ensuring continuous power supply and protecting against outages or electrical faults. With the rising demand for more power-hungry equipment, such as high-performance servers and 5G infrastructure, the need for robust LV and MV switchgear solutions has grown significantly.
The use cases of LV and MV switchgear in data centres are diverse. In a typical setup, LV switchgear ensures the safe distribution of electricity to low-voltage systems, such as server racks, while MV switchgear manages medium-voltage power from the substation to the main distribution panel. These components help prevent downtime and manage power flow with advanced monitoring and control features, enhancing the efficiency of data centre operations.
In addition, as sustainability becomes a priority for businesses, energy-efficient switchgear solutions are gaining traction. Modern LV and MV switchgear systems integrate renewable energy sources, helping data centres reduce their carbon footprint while optimising power use.
2. OEMs’ Plans for Capacity Expansion and Technological Advancements
As demand for data centre infrastructure continues to grow, the major OEMs (original equipment manufacturers) in the LV and MV switchgear market are investing heavily in expanding their production capacities. Companies like Vertiv, ABB, Siemens, and Hitachi Energy are at the forefront of this expansion, preparing for the surge in demand driven by increasing digitalisation across industries.
Vertiv, for example, has committed to doubling its manufacturing capacity for switchgear, busway, and integrated modular solutions by 2025. This expansion follows their acquisition of E&I Engineering and PowerBar Gulf in 2021, which has helped them tap into a broader market and cater to the increasing demand for more robust and energy-efficient solutions. Their focus is on increasing capacity and developing more innovative, more adaptable solutions that can handle future power distribution needs, such as those required by data centres housing AI, machine learning, and edge computing applications.
Similarly, Hitachi Energy recently announced a $60 million investment to boost its production of high-voltage switchgear and breakers at its Mount Pleasant, Pennsylvania facility. This move highlights the company’s recognition of the growing power requirements of data centres and its commitment to providing innovative solutions to meet these needs. The investment will also enable Hitachi Energy to provide advanced dead tank breakers, gas-insulated switchgear, and hybrid switchgear, which are increasingly essential to meet the high-performance standards expected from data centre operators.
These expansions in capacity and innovation focus not only on breakers and equipment but also on the ability to integrate with cutting-edge technologies such as digitalisation, artificial intelligence (AI), and renewable energy. As data centres embrace these technologies, OEMs must evolve their products to meet the new challenges associated with greater data throughput, lower energy consumption, and more complex power requirements.
3. The Dynamics of the Power Distribution Ecosystem: OEMs, Assemblers, Distributors, and Data Centres
The relationship between OEMs, assemblers, distributors, and data centres is central to the success of data centre buildouts. OEMs are responsible for designing and manufacturing the core switchgear systems, which are then passed on to assemblers. Assemblers integrate these components into complete systems tailored to the specific needs of the data centre. The final step is distributing these systems to data centre operators, who rely on their efficiency, safety, and scalability.
This supply chain is crucial for ensuring data centres receive suitable power distribution systems for their specific requirements. As the industry has become more complex, distributors have become critical players in ensuring data centre operators get the necessary equipment and installation and maintenance support. Distributors are increasingly offering more than just products—they also provide added-value services such as consultation, customisation, and after-sales support, ensuring that data centres are equipped to handle power distribution effectively.
A key challenge in the relationships between these stakeholders is the growing need for specialisation. The rise of hyperscale data centres, which require more customised and larger-scale power distribution systems, has led to an increase in demand for specialised assemblers who can tailor switchgear solutions to each data centre’s unique needs. Data centre operators now often require more advanced, reliable, and flexible systems that can accommodate the future expansion of their operations.
4. The Incentives for OEMs, Distributors, and Data Centres to Directly Engage
While the traditional supply chain involves OEMs, assemblers, and distributors, there are increasing incentives for data centres to engage directly with OEMs, bypassing assemblers and distributors. The main reason for this shift is cost-effectiveness. By cutting out intermediaries, data centres can secure more competitive switchgear system pricing, potentially lowering operational costs.
However, OEMs and distributors have significant incentives to maintain their positions in the supply chain. OEMs, for instance, are looking to expand their market reach and increase control over product quality and customer relationships. By engaging directly with end customers, they can ensure that their products are properly implemented and optimally maintained, thereby enhancing the customer experience. This is particularly important as the need for after-sales support and service grows.
Conversely, distributors have the advantage of local market expertise and are often better positioned to provide ongoing support, installation, and maintenance services. They can also offer tailored solutions that meet the specific needs of individual data centres, which may not always be possible through direct engagements with OEMs.
Ultimately, data centres’ decisions to engage directly with OEMs or work through distributors depend on several factors, including cost, customisation requirements, and the need for ongoing support. OEMs and distributors’ ability to stay competitive in this evolving market will depend on their ability to offer value-added services, such as consultation, system integration, and proactive customer support.
Conclusion
As data centres expand and evolve, the importance of low and medium-voltage switchgear solutions will only grow. OEMs, assemblers, distributors, and data centre operators must work together to ensure that power distribution systems meet the demands of the modern digital economy. With ongoing technological advancements and capacity expansions, the future of switchgear in data centres looks promising, offering enhanced reliability, efficiency, and scalability. The power distribution ecosystem will continue to evolve, driven by the growing need for sustainable, reliable, and energy-efficient solutions in an increasingly digital world.
As the industry adapts to new technologies and power requirements, stakeholder collaboration will be vital to powering the next generation of data centre infrastructure.
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