 Welcome to JSATV Europe together with the greener data movement for this quarter's live event focused on European Digital Infrastructure Sustainability. I'm Jean-Marc Lim and joining me today is Stephen Beard, partner night Frank and Stephen. Welcome so much to JSATV. You're at the airport to go to another industry event. I mean first of all I hope you're doing well. Secondly let's talk about data center developments and how sustainability plays in that. So when you're someone that has your things in a lot of pies and very interesting pies to go and it's in a lot of very interesting regions and markets across the year. When looking at a greenfield in general data center developments expansion, how important is it green power and sustainability in the decision-making process? Yeah thanks Joan and thanks very much for having me. Apologies for being in an airport environment but to answer the question directly our data center development teams are helping operators and hyperscale alike acquire new groundfield and greenfield development across all global markets. What I can say is that 80% of those clients are embracing the required change in approach. The majority of the 20% tend to be in emerging markets or where the modern-day ESG fundamentals are yet to arrive. Ultimately they will come on board because that's just natural market evolution but the first starting point really with any client is analyzing the makeup of the transmission network in terms of its renewable components. Of course the Nord explodes every other market out of the water with the likes of Iceland and Norway representing 100% and 99% respectively. When you compare that to Germany in the UK it's 45 and 40% respectively. So with that information in hand most of our clients will say okay well then how can we improve the renewable power that we're receiving to our site so they'll engage with DNOs in order to make sure that the DNO can guarantee that the power coming to the data center facility is a 100% renewable and they'll pay for the benefit in that. If that isn't always possible then of course the next step is looking at investing directly on-site or off-site renewable production so whether that be solar, onshore, wind, gas turbines etc etc. I think really the key big change going forward hopefully from a European perspective alone will be the future adoption of nuclear power. Now obviously that's not a renewable component but it certainly is a recyclable and certainly better than what we've got today. That's interesting, you mentioned quite a few interesting things about the nuclear power of course being one of them and we know that's a big topic in France and UK especially but then also the investment by operators into renewable farms and we've seen that a lot especially in Southern Europe. Speaking about Southern Europe, when you look at the markets and beyond the Nordics what other regions are benefiting the most from green power investments? Yeah I think ultimately when you look further afield you've got to look at those locations which have good access to offshore wind farms and natural daylight. So those Southern European countries the likes of Spain, Portugal and Athens which too very interestingly are also benefiting from the plethora of subsea cables interconnecting those locations with the rest of the world. So the perfect mix particularly in Southern Europe at the moment where we're seeing huge inbound inquiries as I say in the likes of Athens, Lisbon and obviously Madrid. Well three very interesting markets and I'm not biased at all when it comes to Lisbon. Of course, of course. But I mean Madrid, Lisbon and Athens are very interesting and I'll probably add in Milan to that list as well within the Southern European sphere. So but when we're looking to ESG within the Institute of Sustainable Development there's been quite a lot of conversations around the good the bad and the ugly. How would you rate what people are doing nowadays around data center ESG and especially green power and what do you think we need to do more? Yeah I think so it's a really good question. I mean you know full well you know that you can't go to any conference now about people leading with the idea of sustainability and I think the market has started to take a more proactive approach. I think you know for the last five six years we've all been talking a really good game and let's be frank you know inherently there has been an element of greenwashing and people talking about meeting the carbon emission targets of the largest three hyperscale in the world. I think now though we are starting to see radical changes in terms of the way we approach our design. You know a lot of data center operators now are looking at pre-fab modular construction. You know even the likes of ECO DC are looking at fabricated timber technology would you believe you know building a data center with wood. It's quite a radical approach. I think more interestingly as well going forward we're seeing parties look to water now as one of the other key considerations as part of their design and operation. Historically we've always analyzed an operator's ESG metrics based on PUE which has made a lot of sense and I think ultimately the industry should shout louder about the improvements we've made to PUE. It wasn't that long ago when we're talking about 1.8, 1.9 and now we're kind of 1.3 as a standard but there aren't enough parties that are looking at water usage effectiveness and so I anticipate going forward that a lot of parties will look at priding themselves on their WUE numbers. I think also in times of the design if you look at say the BBC panorama program that came out a couple of weeks ago, it was barely one-sided. I had to bring it up right and based here in the UK and it's BBC is our home terrestrial TV show but it was a very one-sided approach but I think as I said they did raise a really good point in relation to water usage and that's something that I think that we have to change but what I would add is that on any development site we're working on today with our clients the first thing we do is we look at the potential to create a district heating network and it is possible if there's an off-taker within a distance not too far away. You mentioned before we came on the call yesterday there'd been an announcement about a swimming pool that was being heated by the excess heat produced by a data centre. There's a number of residential developments throughout Europe that have the same benefit. There are radical changes when it comes to design, operation and I think that's a really key thing for the industry to be shouting about. We've seen as well that one of the Paris 2024 Olympics pools is going to be heated by a data centre, a new data centre. The message is starting to get there slowly but how do you think we can tell this message better to the wider audience because often we talk to ourselves in the industry and this is from the industry for the industry by the industry and the conversation needs to shift a little bit more towards the wider public to also help shape the public opinion of what data centres are and what data centres do and their contribution to the economy and to everyone's daily lives. I mean this data centre has got us through COVID essentially without a massive job market call out like what happened during the Spanish flu. So how do you think the industry can tell the story better around data centre sustainability to encompass the wider public? Yeah, I think again inherently given the nature of the critical nature of the IT infrastructure that's being housed within these data centres, we as an industry are very opaque. We don't like making too much noise about entities that are taking space. We don't like making too much noise about the fact that we are consuming lots of power historically but we are making changes. I think we've got to be a lot louder. I think the industry has to come together much more. It's a little bit too fractured. Fundamentally the layman as you rightly said doesn't really truly understand the benefits of a data centre from an environmental, from a social, from a financial and from a governance perspective and we need to do more to educate the masses. As you said the COVID vaccine was found within algorithm that was housed in a data centre. So too was the Ebola vaccine as well. I don't think enough people recognise that every click, swipe and tap we make online goes through a data centre and as you rightly say it ultimately was the network that held up when everyone was working at home through COVID. So fundamentally there has to be parties like yourself and Knight Frank and our competitors to really come together and start singing and shouting about all the positive impact that the data centre sector is having. Absolutely, I mean you expanded on the life sciences aspects with COVID vaccines and Ebola. I mean what's happening within that space alone it's amazing because this eventually and not taking away maybe not being too while on discussion but eventually this is where cure for everything that we face in cancers and everything else is going to come from. It is through these data houses processing with massive amounts of data centres or computing centres, modern data centres. Yeah exactly and I think to be fair to you that to be fair that you know there is a lot of negative sentiment with it with data centres generally and we're finding this across the board throughout Europe now because most you know most average people you know who don't know much about data centres the average person they just assume that data centres don't employ anybody and just consume lots and lots of power and of course you know the scale of growth within our sector is astronomical but what you have to remember is that it's all relative you know the the creation the adoption of public cloud is less than 10 years old you know it's a bit like saying that if if we were to suddenly build houses let's say we never had houses before or construction for the world's population of course there'd be an unbelievable amount of development so that's all that's happening it's just a rapid rapid acceleration and of course it will plateau in time you know with with greater efficiencies and greater efficient technologies and we're seeing that across the board now you know one of the stats that I wasn't that happy with in the BBC panorama programme was talking about and highlighting the data centres markets contribution to world global power consumption here being around 3% but that stats been there for five years so actually what it shows is that we're being much more efficient with the way that we're developing and operating and ultimately using these facilities I mean it's quite a radical thing to say but you know perhaps we should start looking at the end users you know the those people like you and I who are using data wasteful data on a daily basis on a daily basis because I think that's the key topic here it's wastefulness and that goes throughout the spine of the sector it starts at the top with the hyperscale who are taking too much space and too much power that they're not even using then it starts with the data centre operators who then have to buy more land and reserve more power than they're actually using it's the CTOs who are putting all their computes in one location because it's just a lot easier from a contracting and an operating standpoint but ultimately it's the end users like you and I and everyone else who are wastefully watching videos in airport lounges waiting for a flight or swiping on Tinder or whatever it may be you know ultimately you know it has to start with the end user and there has to be some form of taxation or cap on people's ability to use wasteful data you touch on two very important aspects of the whole discussion because those three percent of of gas emissions that there is this produced worldwide first I don't think it's three percent anymore I think it's slightly less but I did see a study once which I can't remember who did it was one of those universities they calculate those things in teasers and post graduates they've nothing had changed over the last as you said five ten years there isn't as we will now account to twenty twenty five percent of gas emissions so the fact that this industry is I don't know if it's doubling in size every year but the fact let's say it's doubling nearly in size every every two or three years and the gas emissions kind of remains the same it's quite promising especially with all the investment that's going in now into renewable energy and which is showing how the industry is what to do as well and then what you say about there for sure for sure because we don't need to start ten thousand pictures of a cat on our facebook page on our facebook timeline neither we need to have 200 apps on our phones and use all of them at the same time so that's yeah and you make a good you make a good point it's about the investment and you know whilst the the data center operators and the management teams within those you know those are the guys that engage with the end users and I had to scale on a daily basis and they're hearing firsthand the management team how important esg is to the end user and that's and that's great to see you know we we all talk about the carbon emission targets of microsoft and amazon and google as of twenty five and thirty the issue at hand really is convincing the investors that sit behind the management teams to actually go and spend more money on developing truly green facilities and it's quite a perverse thing for an investor to consider you know when we've been seeing five to six years of MEP cost inflation where we're up at you know nine ten eleven twelve million dollars per megawatt of it for fit out you know to tell the investor hey look i want us to make sure we're building the greener status center and so we want to have certified green concrete certified green steel we want to have a district heating network tick tick tick tick tick and we want to inflate the overall construction cost by 20% the investors going to turn around and say what are you crazy but it requires a complete change of mentality from the investor to recognize that you know it's all relativity if you're building the greenest cleanest data center then it's going to be much more appealing to the end user so it's going to enhance your credibility and letability and more importantly the rental tone so i think as soon as those management teams can really convince the investors and we've got you know proof of concept somewhere in europe or someone does develop the truest greenest data center has managed to charge a premium for the benefit then i think everything else will will will cotton on but but clearly it all comes down to money right and we've got to be able to convince those investors who are deploying that capital um but it's worth it's worth doing so yeah and the interesting thing about this industry though the funny thing is that there's a lot of capital is just how do you tell the stories to get the capital out of the door on the ground to build those kind of Stephen i'm not going to explain too much on what you said because i know you have to leave on top of the hour so we've got just a few minutes left what's knight frank doing at the moment and what's the focus going to be over the next 12-18 months around data center development in europe yeah thanks we um we have a bit of a saying i mean you've probably heard it before i mean we try and put the operators hat on if you like and rather than chasing cloud we like to get ahead of it so um you know i like to spend my time in emerging markets where we can certainly see uh the governments of those countries start to look at tendering to public cloud which will obviously be the catalyst for growth in that sector so we do a lot of upfront analysis on existing smaller retail platforms that would be right for m&a brownfield development that we could proposition and position as being a viable leading next best data center development site so uh that's probably why when you look at us on linkedin you'll see us at the front front end of the market a new challenging locations but ultimately that's because we we want to help those markets become much more efficient and much more appealing so we want to reduce those barriers to entry so hopefully we're a conduit uh and a positive conduit uh at best what are you doing especially the developments and your announcement last week in part agility um though there was interesting what i think what's going to come um would be quite a nice story to to to see and fault and then Stephen so if i'm a developer and investor if i'm someone in this space they want to learn more about what you do and wants to reach out how can i do that um just drop me an email um we've got a big team below us there's a team of 17 guys now based out of out of london we've got a team of six in singapore and a team of nine based out of the west coast of the u.s so um we're always open to conversations and i can guarantee the guys will get back to you in 24 hours 24 hours that's quite a statement uh Stephen think there's something i'm probably watching this now thank you yeah you can thank you for your time i see the next conference yes and uh as for you viewers at home think what you mean to jay say europe tv live don't forget to check our social channels for more content until next time happy networking