The data centre frenzy: unraveling Private Equity & M&A trends


In recent years, data centres have emerged as a hot investment class in the world of private equity and mergers and acquisitions (M&A). As businesses increasingly rely on digital infrastructure, the demand for data centres has skyrocketed. This surge has led to a highly competitive market with stratospheric valuations and multiples. In this article, we will explore the driving forces behind this data centre frenzy, the potential for further valuation increases, and the role of edge computing in the next phase of M&A. We will also delve into the evaluation of risk in data centres as an asset class and the key drivers of value in this dynamic sector.


The Current Multiples and Attraction for Investors

The intense competition in the data centre space has pushed acquisition multiples to unprecedented levels. Valuations as high as 33 times earnings have become more common, making data centres a lucrative investment option. Investors are drawn to data centres due to several factors:


  1. Resilient Market: Data centres have proven to be recession-resistant and resilient during economic downturns, making them a reliable long-term investment.
  2. Increasing Demand: The exponential growth of data and cloud computing has driven the need for more data centres to support businesses worldwide.
  3. Cash Flow Stability: Data centres typically offer stable cash flows due to long-term lease agreements with tenants, providing a consistent income stream for investors.


Emerging Geographies in the Next Phase of M&A

While most of the acquisitions have occurred in the US and Europe, there is growing interest in expanding data centre footprints to other regions. The Asia-Pacific region, including countries like India, China, and Singapore, holds immense potential for the next phase of M&A. These markets have seen rapid digitization and a surge in cloud adoption, making them attractive destinations for data centre investment.


The Potential for Further Valuation Increases

As data becomes even more critical in the post-pandemic era, the demand for data centres is expected to rise further. This sustained demand could lead to even higher valuations and multiples, especially if supply struggles to keep up with the increasing need for data centre capacity.


Edge Computing as the Next Big M&A Play

Edge computing, which involves processing data closer to the source rather than in centralized data centres, is gaining traction rapidly. As businesses seek low-latency solutions for real-time data processing, edge data centres have become crucial. This shift towards edge computing is likely to trigger a new wave of M&A activity in the data centre industry, with companies aiming to strengthen their edge presence and capabilities.


Evaluating Risk in Data Centre Investments

Despite the strong fundamentals, evaluating risk in data centre investments is essential. Key factors to consider include:

  1. Location: The geographic location of data centres impacts their resilience to natural disasters and connectivity to major network hubs.
  2. Tenant Mix: Diversification of tenants across various industries reduces the risk of revenue concentration.
  3. Technological Obsolescence: Data centres must continuously upgrade their infrastructure to keep up with evolving technology and customer demands.


Key Drivers of Value in the Data Centre Sector

Several factors drive value in the data centre industry:

  1. Location: Strategic locations close to major business hubs and under-served markets add significant value.
  2. Energy Efficiency: Data centres with advanced cooling and energy-efficient systems result in cost savings and environmental benefits.
  3. Scalability: The ability to quickly scale operations and capacity to meet increasing demand is crucial for sustained growth.



The data centre landscape is experiencing a frenzied period of private equity investments and M&A activities, driven by the exponential growth of digital data and cloud computing. As investors seek to capitalize on the data-driven future, valuations have soared to unprecedented heights. The allure of stable cash flows, a resilient market, and increasing demand for data centres continue to attract investors. As the industry evolves, edge computing is poised to become the next major M&A play. However, amidst this frenzy, evaluating risk and focusing on the key drivers of value will be essential for successful data centre investments in the long run.


Who called it a waste?

As we all realise that our laptops are heating our legs when we use them while sitting on the sofa, one can imagine how much heat is generated from thousands of powerful servers racked together in a data centre. IT equipment (ITE) in a data centre transforms almost the entirety of energy supplied to it into heat. All other auxiliary elements present in a data centre are also mostly electrical energy based and eject heat as well. While a laptop could require around 100W of power, [1] typical servers employ 5 to 10 times more.[2]

When putting many servers together and cooling them commonly, we could gather a very valuable amount of heat. Thermal energy could be extracted and supported in a fluid, usually water. That warm water can then be easily transported and reconducted to be used for an application that has need of heat.

We hence need to grow accustomed to seeing a data centre as an important thermal source, rather than as a huge electricity consumer. For roughly a century, heat recovery has been applied to industrial processes, and especially as a byproduct of electricity generation. While heat reuse from data centres is not a frequent practice, it is currently gaining a lot of attention and several projects have been already developed, particularly in Europe. Heat reuse in data centres might soon become a necessity since some local legislations are exploring the idea of mandating to consider this feature in data centres.[3]

Excess heat from data centres can be of different qualities and quantities but there are numerous potentials offtakers of that heat:

Although some processes in the industry could employ elevated temperatures, floor heating for agricultural or residential purposes can work with temperatures around 30ºC which is the typical low-grade temperature of the excess heat generated by a classical air-cooled data centre. Heat pumps for increasing the temperature and storage tanks to sync the heat generation with the heat demand of the offtaker could be a plus.

The offtakers, regardless of whether they are a utility or not, are moving towards the electrification and decarbonisation of their heating needs, which is increasing the usage and promotion of heat pumps.[4] These will be more energy-efficient when working against a 30ºC temperature (from the data centres) than working against lower variable ambient temperature.

In addition to the economic benefits of reduced cooling and heating efforts required by data centres and offtakers respectively, excess heat reuse has clear advantages towards carbon emissions: less energy required for cooling results in reduced electricity usage and hence less associated emissions, while less energy required for heating results in lower demand on electricity, gas, or other fuels typically used for heating at the offtaker and hence also lower emissions.

It is shown that the best approach towards effective heat recovery is to form partnerships with utilities or industrial partners at the conception of a project, with partners who have heating necessities that could benefit from the waste heat of a data centre. This, in turn, results in heat being turned from a liability into an asset for both parties. The matchmaking between both activities requires good intersectoral communication (which is a challenge) and will require collaboration at different layers and will probably require the involvement of public authorities to set standards of communication and working methods.








Sustainability Innovation for a Carbon Free Future

Sustainability Innovation for a Carbon Free Future

Sustainability Computing: Zero Carbon Haven at AQ Compute

Authored by Susanna Kass, Energy Fellow, Stanford University, UN SDG-EP with contributions by Jaime Comella, Lead Data Centre Architect, AQ Compute


Renewable Energy and Energy Storage are going through a breakthrough transformation in its own economics to show its promise to scale in new opportunities to power the Net Zero Data Centers with affordable, clean energy. It is proven that the hyperscalers in the past two decades; AWS, Microsoft Azure, Google GCP, Meta-Facebook, Apple are responding with Gigawatts of Renewable Energy purchases, its fence-thinking strategies to meet its Carbon Neutrality Goals.



AQ Compute focus is to accelerate the growth trend to enable Carbon Neutral Data Centers throughout the Data Center Lifecycle, by introducing Zero Carbon Haven across a pan-European site portfolio to accelerate carbon free communities in European Union countries.


Data centre at the core of a renewable energy and circular ecosystem

Figure 4-circularity-in-data-centre-susanna-kass

Figure 4: Circular Economy for Data Center Lifecycle Source: Susanna Kass

AQ Compute and its parent company, Aquila Capital, collectively are advancing more sustainable computing across an existing and future pan-European fleet of site(s) with eco-conscious, cloud-sovereign data centers, ensuring end-to-end optimal path networks, and circularity, reducing the depletion of environmental resources. Specifically, AQ Compute aims to offer a Zero Carbon Haven Computing, specifically for higher density GPU- computing and AI-driven software supporting a 24/7 renewable energy platform.





AQ Compute-Figure 5-Clean Energy Infrastructure to Harmonize with Carbon Free-Community

Figure 5: Clean energy infrastructure to harmonize with carbon free community (Source: Shutterstock, liyuhan)

In an industry driven by electrical power, AQ Compute is conscious of the importance of ensuring a renewable energy supply to power its data centers. The parent company,  Aquila Capital has a track record in developing Gigawatt scale renewable energy projects, utility scale energy storage as an asset management company. This approach accelerates Data Center operators to get access to zero carbon emissions power supply. Net Zero Data Center gains carbon free energy of on premise renewable energy assets at AQ Compute, a Zero Carbon Haven compute platform with net positive impacts. Additionally, with Power Purchase Agreements (PPAs) for the Data Centers can accelerate to meet the Carbon Neutrality goals. AQ Compute, via Aquila Capital, stated its commitment to match per megawatt of renewable power needed by AQ Compute Data Center clients with new and incremental renewable power project development. The result is more clean energy for our people, our planet and scale for growth with profits in a carbon free future.

AQ Compute’s data centres aim to act as power grid stabilizer using its on premise energy platform and back-up systems. In times where renewable energies are massively entering into the power grid mix, frequency stabilizing mechanisms are required. Hyperscale data centers having intensive loads, are candidates that can operate continuously without connecting to the grid hence achieving resiliency with the highest uptime performance.


Each data centre has excess heat, and millions are spent in cooling technologies. The excess heat resource can be reused in the circular data centre ecosystem to provide new value to society of cost saving benefits of heating services. Sustainable Innovation includes high temperature direct liquid cooling from the ITE and CO2 as a thermal carrier to carry the excess heat from the data centre that is extracted directly from air or liquid cooling. The circular network of excess heat prototypes are working now in megawatt scale and can be ignitors in Gigawatt scale. The results are impactful to the environment; reduce hundreds of millions of GHG emissions to the environment; economic savings of not needed power to cool the data centres and reduced energy cost savings for society to receive heating from the excess heat from data centres in a circular ecosystem.

Figure 6: Heat Reuse from Data Centers (Susanna Kass)

Figure 6: Heat Reuse from Data Centers (Susanna Kass)

It is an opportune time to invert the status quo of a linear economy. Net Zero data centre is a new generation to revitalize a clean energy and circular ecosystem creating new value to the communities and to the environment, by:


Sustainability Innovation


State-Of-the-Art computing needs also to be sustainable in its consumption of resources. AQ Compute tracks the computational capabilities trends required for modern Machine Learning systems which is measured in floating-point operations per second (FLOPS). The fact shows it has grown by hundreds of thousands of times since 2012. (OpenAI, 2018[1]; Sevilla et al., 2022[2]), despite algorithmic and software improvements that reduce computing power.

Deep learning dramatically increased the size of machine learning systems, and their compute demands. There is a shift in the industry from general-purpose processors, namely Central Processing Units (CPUs), to processors that include specialized hardware and support more efficient compute execution for certain operations (i.e., requiring less energy and achieving more computations per unit of time). Today, Machine Learning systems are predominantly trained on specialized processors that comprise hardware optimized for certain types of operations, such as Graphics Processing Units (GPUs), Tensor Processing Units (TPUs), Neural Processing Units (NPUs), and others. It is less efficient for AI systems, Security systems, Data Science Systems, Quantum Networks that correlate massive data to use traditional CPUs.


Aligning Sustainable Compute Capacity with Sovereign Cloud Strategies

To address a gap in the industry, AQ Compute Sustainability Leadership works in UN SDG-EP and is one of the Climate Experts, Researchers at The Intergovernmental Panel on Climate Change (IPCC) Group to help policy makers align sustainability policy with national clean energy standards. These considerations are not exhaustive and vary according to national contexts and needs, they are the outcome of extensive evidence-based framework by the Expert Group members and exemplify a science-based approach on how to systematically measure and plan Sustainable Computing capacity for current and future Digital Transformation Business needs. The government head of EU countries should consider AQ Compute platform to future proof its national investments relative to meeting its national policy objectives, including public-sector budget, national allocations and private-sector investments. Policy makers ought to use evidence-based models to shape the most resilient approach by the country’s context and needs.  Such an approach is strategic to include the use of its investments and sponsored strategic partnerships with AQ Compute Sustainability Leadership to gain sovereignty amongst cloud providers. Policy makers can consider how public- and private-sector investments in a country Sustainable computing capacity can advance different types of policy objectives for its countries.  Scaling out AI- enabled Sustainability Computing can future proof investments. AQ Compute pan-European sites enable agility and growth, at EU-scale.  The scaling out approach is proven and commonly seen in countries where multiple smaller clouds are installed and replicated in availability zone(s) for resilience support to broaden access with efficiency.


Looking Beyond: Invert Status Quo To Take Action to Make Net Positive Impact

Source: UN SDG, Susanna Kass

“In my journey, I have fought for what I believe in and what the UN SDG Environmental Program and Stanford University stand for. The impact of a carbon free future is paramount for our generation. We must take action to pave the way for the future generations of people. The planet itself is resilient; meanwhile, humans are depleting our natural ecosystems  at a fast pace in a linear economy; grab, use, toss.” said Susanna Kass.  I lead in a way to make each moment count, which is actually the motto of Stanford University Graduate School of Business (GSB).  Recently, Susanna became a member of the Stanford University GMB board Women’s Circle Growth and Ops, leading impact and analysis. Back to the Data Centers, however, I would like to take action with Data Center cloud providers as a clean cloud builder and start each day as the first working relentlessly to make a net positive impact with Net Zero providers. AQ Compute Zero Carbon Haven Sustainability Computing platform exemplifies the SDG impact.” I would like to help lead the next 30 Gigawatt  of Renewable Energy Data Center projects by 2030.”





The 3 (or 5) scopes of carbon emissions

The 3 (or 5) scopes of carbon emissions

The most recent ESG commitments of carbon neutrality from sovereign states and big corporations set the carbon neutrality goal in 2050. As Lord Kelvin said: ‘if you cannot measure it, you cannot improve it’. [1] Back in 1998, the GHG (Greenhouse Gases) Protocol established three different scopes for quantifying the carbon footprint of an item (or an activity, product, etc…).[2] During the last 25 years it seems the focus of carbon emissions reduction was rather set on the ones we can directly see (such as the emissions related to the combustion of fuels), but recently the embodied emissions have become more relevant and have been set as the next step to reach carbon neutrality.

In this article we would like to address the following questions:

How are the carbon emissions scopes defined? Which elements of the data centres are accountable for which emissions? Can emissions be double accounted?

Aq-Compute-Carbon-scopes-Figure 1-Greenhouse-gases

Fig.1 Greenhouse Gases and their Global warming potential. Source: IPCC 2007

First, what does Net Zero mean? The most accepted definition of a Net Zero activity or product is one that achieves the lowest possible amount of greenhouse emissions from its conception and neutralizes the inevitable emissions by removing an equal amount of them.[3] A carbon neutral activity or product will be very similar, but the focus is not set in removing the emissions: the offsetting or balancing by buying CO2 rights is more common in this case. When saying carbon neutrality, as it refers to carbon emissions, one could inflect that other GHG are not considered. There is no official definition for ‘Net Zero’ or ‘Carbon neutrality’, so, ideally, these terms should be explained when they are used.

Another important topic that needs to be addressed is the usage of the words ‘carbon emissions’. Since there are several greenhouse gases, scientists use a simplification normalizing the greenhouse effect of all GHG by comparing them to the effect of the most common one: the carbon dioxide or CO2. The parameter evaluated for the severity of the emissions is the global warming potential (GWP) during the lifetime of the GHG in the atmosphere. The global warming potential of a gas is the quantity of heat it absorbs in the atmosphere as a multiple of the heat absorbed by a same mass of CO2. As an example, the SF6 has a GWP of ca. 22,000 times higher than the CO2, meaning they potentially can absorb 22,000 times more heat than a same mass of CO2 emissions (see Figure 1). As all the GHG are reduced to a comparison with the CO2, the carbon emissions we refer to when talking about global warming effect are called CO2-equivalent (CO2e) emissions and refer as well to all other gases that are emitted during an activity.


Emissions scopes

There are officially three carbon emissions scopes, as depicted in Figure 2:


Fig.2 Representation of the three different scopes emissions. Source: WRI/WBCSD Corporate Value Chain (Scope 3) Accounting and Reporting Standard, page 5.

As we can imagine, one same activity can incur a determined emission scope for various stakeholders involved in its deployment. An easy example of this is the electricity used from the grid. To get that electricity to the consumer, it had to initially be generated at a power plant which in many cases causes some form of emissions (e.g., burning fuel to rotate turbines generating power). These emissions are classified as scope 1 for the power plant owner. The users of that electricity will not generate the same emissions themselves but can report those emissions, which for them will fall into scope 2. If these users then employ the same electricity to transform goods (for example, to cut wood and build furniture), this product, if passed to somebody else, will have, ‘embodied’ almost the same amount of emissions that the power plant originally generated,[4] but will fall under scope 3 emission for the next user of the value of chain. In this case, we call this ‘embodied carbon’, because it is an essential part of the elaboration of the product and assimilates to it existence

In data centre infrastructure, different activities can be classified into different scopes depending on the point of view chosen by the reporting party. In the following example, shown at Figure 3, we have three parties: an IT operator providing IT services based in its own IT equipment and/or facility, a Cloud operator providing Cloud services, and a Colocation operator providing data centre space and services, coupled with four scenarios in which they are interrelated when reporting about the emissions of the electrical power employed for their services.



Fig.3 Emissions scopes from three different actors involved in IT and data centre services at 4 different scenarios. Source: The challenges of managing scope 3 emissions, webinar Uptime® Intelligence)

In the last scenario, where the three of them are involved, the emissions associated to the employed power are to be reported by one party, depending on the considered element. The colocation operator provides a facility with power, at a determined temperature, and will report the emissions of the facility as scope 2, but not the emissions of the IT Equipment belonging to the Cloud operator. These are reported as Scope 2 for the latter and Scope 3 for the former. The IT operator is buying services from the Cloud operator, who is offering a virtual infrastructure hosted in its ITE (IT Equipment), which in turn is hosted in a third-party data centre, so will report all the emissions as upstream emissions, belonging to scope 3.

Since all the emissions are shared by the different parties involved one could ask who is accountable for which emissions, and how these are being compensated. To simplify, if all the scope 1 emissions were avoided, there would be no emissions to be compensated on the other scopes. The same happens with the compensation of emissions. Note that a scope 1 or 2 emission only belongs to one party and is transformed into a scope 3 when it jumps into the value chain. It then remains as scope 3 emissions for all the underlying downstream parties. A scope 2 emission is always preceded by a scope 1 emission (plus a usually smaller amount of scope 3 emissions). Therefore, proper measuring and tracking of the emissions is incredibly important to know, to avoid double compensations.



Fig.4 Interconnections of the different carbon scopes emissions. Source: AQ Compute



Table 1 shows what kind of emissions and under what scope happen at a colocation data centre:


Scope 1 Scope 2 Scope 3
  • Back-up power: emissions from diesel generators
  • Cooling: emissions from refrigerants
  • Heating: emissions from refrigerants and boilers
  • Internal power distribution: losses from insulation agents for switchgears
  • Transportation: emissions from the on-site fleet (cars, forklifts, etc.)









  • Power supply: emissions associated to the power grid supply
  • Heating supply: emissions associated to the heating grid supply
  • Cooling supply: emissions associated to the cooling grid supply










  • Built structure: emissions incurred in manufacturing the building materials
  • Civil works: emissions incurred while assembling the building materials, preparing the land, etc.
  • MEP components:[1] emissions incurred in manufacturing the MEP components (chillers, CRAHs, Gensets, UPSs, batteries, PDUs, etc.)
  • Transmission and distribution losses: emissions from the losses happened during the distribution of electrical, heating and cooling energy from the grids
  • End-of-life treatment: emissions associated to the disposal and recycling procedures (incineration, decomposition, disposal of refrigerants, recycling transformations, etc.)
  • Purchase of services: emissions incurred in the fibre connection provision, cleaning services, security services, etc.
  • Use of goods/assets: emissions associated to the usage of sold, rent objects, such as the emissions

[1] Mechanical, Electrical, Plumbing

Table 1. Examples of different emissions origins classified under the different 3 scopes. Source: AQ Compute’s own elaboration


The origin of the carbon equivalent emissions in a data centre are multiple and involve several stakeholders through the entire lifecycle: during the design phase and all the activities involved, during the procurement of materials and components and the activities of subcontracted companies, during the operational phase for the energy sourcing used also by the tenants of the data centre, and during the end-of-life phase when removing items, whether disposing of or recycling them.

We could be also imaginative and try to define two new carbon scopes:

Scope 0: all the emissions that are not generated due to avoided activities. We should always ask ourselves if what we are building or doing is really required and if not, avoid unnecessary activities and emissions. The most sustainable data centre is the one that is not needed.

Scope 4: avoided emissions that some activities of a party would generate into the emissions scopes of another party but cannot be accounted as any carbon emission scope (nor 1, 2 or 3) for the first one. An example would be the emissions avoided at a heat ‘offtaker’ by recovering the excess heat of a data centre. The avoided emissions resulting from not using gas for heat are not accounted by the data centre but are triggered by its actions. It will belong to avoided scope 1 or 2 emissions of that heat ‘offtaker’ and we could consider them as avoided emissions. On the other hand, excess heat recovery will have a direct effect in the energy efficiency of the data centre because it would need less cooling energy, hence, less power and less emissions (scope 2 emissions).

Food for thought: could water footprint be measured in the same way?

Short answer: yes. However, water footprint is not calculated along scopes 1, 2 and 3, but in indirect and direct uses: the water footprint associated to the building, manufacturing of components, assembling, power production, etc. (indirect use) and the water directly used for cooling/heating purposes, humidifying, cleaning, etc. (direct use).



We have seen what is to be net zero and how important is to be able to measure the carbon footprint (rather, the carbon equivalent, a simplification of the GHG footprint) of an activity or a product to be able to achieve the ambitious goals set by the sovereign states and the biggest corporations. Due to the interrelation between different parties when dealing with different emissions, sustainability goals are to be achieved by the common work of all the stakeholders involved. Proper measurement and communication between parties is needed to avoid double accounting and to be able to set logical and realistic roadmaps for a net zero future. In the case of data centres, there are multiple sources of GHG emissions and multiple stakeholders involved. The unstoppable digitalization trend will increasingly employ more ITE and data centres and we have a chance to show this trend not as a menace but as an example to be followed by other industries.




[1] Lord Kelvin was the mathematician and physicist who defined the homonymous temperature scale with the absolute zero as the lowest temperature possible (-273,15 ºC)



[4] We should consider the losses at the generation, the transportation and manufacturing

[5] Mechanical, Electrical, Plumbing

Realising sustainable compute capacity for daily digital applications

In today’s business world, integrating ESG criteria is no longer a choice but an obligation. Sustainability is particularly relevant for the data centre industry which is characterised by a high power consumption.

In order to quantify the CO2e emissions that AQ Compute’s data centres save compared to conventional ones, a customised CO2-eq calculator has been established by AQ Compute.
This tool compares the carbon footprint of AQ Compute’s data centre AQ-OSL1 to data centres in eleven other European countries. 

Read the publication: Realising sustainable compute capacity for daily digital applications


Carbon dioxide compensation – Greenwashing or a sustainable concept?

The conception of carbon certificates has created a new model of contributing to a CO2e reduction, by creating a financial instrument that allows private investors to access sustainability ecosystems. However, by turning carbon into a potentially lucrative economic model, how much of a tangible effect can carbon certificates have on the global reduction of CO2 emissions?

In this brief opinion piece, we look into the impact of the instrumentalization of carbon certificates and how the individual can contribute to the stabilisation of global warming.

Read the publication: CO2 compensation – Greenwashing or sustainab01le concept?

Battery storage: System stability and efficiency

One of the challenges of dealing with renewable energy sources is the frequency and availability of supply. It has been demonstrated that the availability of renewable energy can directly be impacted by seasonal changes – in essence, less photovoltaic power is generated on average in winter months.

How does battery storage help counter the seasonal energy deficits in a sustainable way? In this paper, we consider the stabilisation offered by batteries for the year-round availability of renewable power supplies.

Read the publication: System stability and efficiency through battery storage – a turning point of the sustainable transformation?

Data centres: Real Estate, Infrastructure or Tech? Does it matter?

In our world, data centres are as necessary of a basic provision as water and heat. However, data volumes are doubling at an exponential rate, meaning our industry has a higher responsibility than ever towards our clients and communities. With the various moving parts that constitute a data centre, it is important to look at the driving forces of growth of the data centre sector: How are data centres being built? How much power are data centres using? Is renewable energy an option?

As a statistically outperforming market which is spearheading the fourth industrial revolution, we investigate the viability of investing in the data centre industry as a long-term pillar of the world’s ongoing digitalisation.

Read the publication: Data centres: Real Estate, Infrastructure or Tech? Does it matter?