Modular Data Centers: The Rising Trend and Ideal Applications

By Tim Hysell, Co-founder and CEO, ZincFive

A data center is typically built like any other building: from the ground up. It takes time and a robust budget to draw out custom plans, source materials and strategically assemble key components like servers, cooling units and backup generators. Ideally, building a data center is a major capital investment that will serve the needs of its owners and operators for years.

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Today’s businesses, however, have needs that are changing rapidly. AI, distributed computing and other innovations are pushing industries to quickly expand and modernize their operations. At the same time, data center operators are often working under fiscal constraints that make accelerated, bespoke data center buildouts simply infeasible.

This dynamic is generating increased interest in one solution: modular data center designs.

Modular data centers are currently a small but growing portion of the market. They accounted for 3.6% of overall data center revenue in 2022, according to research firm Omdia. Worth $3.25 billion in 2023, the modular data center market is expected to hit $5.25 billion by 2026.

What is a modular data center? Unlike the traditional stick-built data center – which encapsulates all the necessary components to run large-scale server operations – a modular data center relies on pre-built components. That includes server modules, cooling modules, power modules and more – built off-site in a commodified fashion. They can be added and subtracted, like boxes of cargo lifted on and off a shipping container. Data center architects can leverage all-in-one prefabricated modules, which include power, cooling, and IT infrastructure into a single solution. Alternatively, they can build out their operations with single-function modules, such as pre-built power or cooling modules.

Data center modules are becoming a more viable option thanks to emerging technologies like nickel-zinc (NiZn) batteries. It’s simpler, safer and more cost effective to build a power module with NiZn battery technology, primarily because of its stable chemistry. NiZn batteries have no thermal runaway at the cell level, meaning a modular unit would not require a fire suppression system. By comparison, a standalone power module with lithium-ion battery technology would require a fire suppression system and may require a deflagration vent. Additionally, with NiZn batteries, a power module could operate at a higher maximum temperature, reducing cooling costs and the footprint occupied by an HVAC system.

Why go modular?

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Modular data center buildouts can benefit both the hyperscaler and the enterprise market, depending on an organization’s priorities. An organization of any size will benefit from the speed of using prefabricated modules, as opposed to building new capacity on site. To be sure, the method sacrifices the ability to customize data center specs, an advantage that larger entities may be willing to wait for – and pay for.

The cost of a data center buildout will be top of mind for most entities, particularly in the enterprise space. When cost efficiency is a priority, a modular approach makes sense. Using NiZn batteries in a modular power unit will bring down its cost in multiple ways. First, a module with NiZn batteries will be smaller than one with lithium-ion batteries by several feet, given that it requires less cooling and fire suppression equipment. A smaller container is simply a cheaper container. On top of that, ZincFive has demonstrated how NiZn batteries can ship straight from the factory to their final destination, completely pre-packaged within a modular battery cabinet. By comparison, volatile lithium-ion batteries typically are shipped separately and installed on site.

Modular units also offer organizations flexibility and scalability. A business can easily build up capacity incrementally, adding units where and when it needs them.

At the same time, module vendors can guarantee a certain level of quality and security. With a standard design, modules should be consistently reliable, as well as relatively simple to manage and maintain. Meanwhile, modular units – built with standardized components – offer organizations a relatively low-waste way to add capacity to their data centers.

The advantages that come with modular buildouts can’t be overlooked in the current data center market. Broader computing trends like AI and high-performance computing will continue to keep demand for quick data center expansions for some time. Meanwhile, ongoing supply chain disruptions and imbalances will make out-of-the-box solutions like modular units all the more valuable. On top of all this, modular units are sure to look more appealing thanks as regulatory bodies put more scrutiny on the environmental impact of data centers and impose requirements for data center efficiency.

As computing needs evolve, data center design is evolving as well, with modular units that can keep up with the accelerated pace of demand without any sacrifices in performance or efficiency.

About the Author 

Tim Hysell is the co-founder and CEO of ZincFive®, the world leader in innovation and delivery of nickel-zinc batteries and power solutions. Tim has over three decades of entrepreneurial success in founding, owning, and directing profitable business operations in renewable energy, banking, manufacturing, and medical devices. His companies partnered with global giants such as Siemens, Phillips, and Hewlett-Packard. Prior to owning his own businesses, Tim worked for General Electric, Hewlett-Packard, and Providence Health Systems.