New opportunities for Poland in data centres

Breaking the monopoly of the FLAPD markets

The FLAPD markets (Frankfurt, London, Amsterdam, Paris and Dublin) have traditionally been ranked among the largest data centre markets in Europe, but all of them are currently experiencing a sharp decline in the available space. The introduction of the NIS2 legislation has led to the imposition of additional cyber security obligations on a wide variety of stakeholders, including those from energy, transport, financial market infrastructure, digital infrastructure, and other sectors. This has resulted in a surge in demand for data centres.

Warsaw's Position in the Context of Emerging Markets

Warsaw's current data centre presence stands at approximately 30. By way of comparison, the smallest FLAPD market, Dublin, has almost 70 centres, while the largest, London, has nearly 140. Madrid, a city with similar potential as Warsaw, has less than 50, and the number of centres in other capitals of the CEE region varies between less than 10 (Tallinn, Bratislava) and slightly more than 20 (Vienna, Prague). 

Warsaw's data centres are predominantly concentrated around the city centre, with smaller clusters located in the districts of Włochy and Ursynów, and several centres situated in neighbouring municipalities.  

The largest Polish investors include Atman, Beyond.pl, Data4, Equinix and 3S, who are also founding companies of the Polish Data Centre Association. The Association was established to ensure the highest standards of data centre operations in Poland and to promote Poland as a developing hub of international importance. 

It is important to note that, in contrast to most of Poland, the market for distribution network operators in the Warsaw area is highly dispersed, which should facilitate the procedures for obtaining connection conditions.

In addition to the largest players on the domestic market, smaller entities (e.g. Polenergia, EON) also hold energy distribution licences, some of them only for designated plots or buildings. By contrast, the rest of the Mazovian Voivodeship is much more homogeneous.

The following factors support the decision to locate data centres in Warsaw:

• Significant demand for data centre services; this is driven by the digitisation of regulated institutions and the developing digital competencies of the local entrepreneurs; 
• Large post-industrial areas are undergoing a transition away from traditional industrial activities, with power plants becoming available for alternative uses. Once adapted, these infrastructure assets can support high-level energy distribution, a crucial element for the operation of data centres.
• Electricity costs remain relatively low compared to direct competitors. 
• No additional regulation directed strictly at data centres; they are built on the same principles as manufacturing and logistics facilities;
• Trust of industry leaders such as Microsoft, EdgeConneX and Equinix;
• Access to skilled workers in the IT industry;
• The region's growing potential for energy production from a variety of sources; 
• Growing market: Despite the entry of international players into the Warsaw market, the saturation of the data centre market remains relatively low, increasing investment opportunities and protecting the potential investor from competition;
• Lower land costs than in Western European countries, which allows for the cheaper development of existing installations and lower initial costs for new investments;
• Good location: Poland has a strategic location on the map of Central Europe – the 'gateway to the East', the confluence of routes leading from the Czech Republic and Germany, the connection to the Scandinavian countries. 
  
  

Tier I and Tier II have emerged as the top performers.

While FLAPD markets maintain their dominance in terms of the largest number of data centres, other European cities are also entering this market. Warsaw is in direct competition with most of the capitals of Central, Eastern and Northern Europe. 

Key players in this field include Berlin, Munich, Stockholm and Prague. Copenhagen, Helsinki and Lulea are also noteworthy. The Nordic countries are attractive primarily because of their low energy and cooling costs due to the climate. Like Germany, they also stand out due to their easy access to RES. 

The Iberian Peninsula's strength lies in its dry climate. Its strategic location in relation to users in Africa, the rest of Europe and Latin America is another key advantage.  

Among the other Polish cities, Kraków, Poznań and Wrocław also have potential for data centre investment, though to a lesser extent than Warsaw.  

In light of these considerations, it is reasonable to conclude that the monopoly previously held by FLAPD in the data centre sector is being challenged by growing competition from the CEE area. Warsaw's strategic positioning allows it to emerge as a leading contender in the region.