Data Center Insights: Mike Zapata of Siemens Smart Infrastructure USA

Dec. 18, 2023
Siemens Smart Infrastructure USA's Head of Data Centers reflects on how with unprecedented industry growth also comes persistent challenges which can impede that growth.

The Data Center Frontier Executive Roundtable features insights from industry executives with lengthy experience in the data center industry. Here’s a look at the insights from Mike Zapata, Head of Data Centers, Siemens Smart Infrastructure USA.

Mike Zapata, Head of Data Centers, Americas, Siemens Smart Infrastructure, is responsible for developing and implementing products, solutions and services to ensure customers’ data centers are resilient, efficient, safe and secure. With over 20 years of industry experience, Mike expertly leads a team at Siemens that brings innovation and advanced technology expertise in building automation, fire and life safety, digitalization, electrification, and decarbonization to create smart data centers.

Here's the full text of Mike Zapata's insights from our Executive Roundtable:

Data Center Frontier:  After this landmark year of unprecedented anticipation for artificial intelligence and machine learning (AI/ML) technologies amid escalating requirements in the traditional cloud, the data center sector is poised to experience even greater urgency of demand. As we proceed into a widely forecasted “new twenty-year cycle" of growth, what will be the most key factors for enabling the industry’s ability to meet such demand next year and beyond? What persistent challenges stand most to inhibit this ability?

Mike Zapata, Siemens Smart Infrastructure USA:  It’s a fascinating time to be in this industry and all the feedback from our clients points to the demand cycle you mention. 

This, coupled with other adjacent industry challenges of demand brought on by the Semiconductor, Battery, Industry 4.0 (and 5.0 just ahead), and power grid markets, contribute to this “new twenty-year cycle” of growth.  

Some of the key factors for enabling the industry’s ability to meet such demand next year and beyond are predictability in lead times and supply chain, standardization, and leveraging AI/ML to help optimize and improve energy efficiency while reducing carbon footprints.  

All of this, coupled with solid customer relationships, will allow us to do good forecasting to help meet our customers’ expectations. 

With unprecedented growth also comes the persistent challenges that can impede that growth. Today, we’re already seeing some regulatory challenges with constrained resources (power and water). This will become increasingly important as the infrastructure needs to scale and expand into secondary markets.  

Additionally, as technology evolves, the need for skilled labor is already a major factor and industry, educational institutions, and trade schools will need to align more aggressively to meet the skillsets of tomorrow.  

Data Center Frontier:  Especially in dense urban markets facing slim availability of critical land and power stakes, "adaptive reuse" of vacant office, retail and other commercial real estate properties for data center design and construction development remains a gathering trend in North America. For investors and providers thinking of adapting a site for reuse as data centers, what makes a particular property a better or worse candidate? And what are the relative considerations for brownfield vs. retrofit development in such cases?

Mike Zapata, Siemens Smart Infrastructure USA:  Fundamentally, the first determinants will be the reliability, capacity, and availability of power, the connectivity options, and the local planning regulations. 

These topics need to be fully digested initially to see if there is even an option to proceed. Then it becomes a structural question. 

Many legacy office buildings will not have the necessary floor loading limits to accommodate a significant data center build.  

However, some will, as we have seen with single-story facilities like warehouses that are being converted successfully in many metro areas. We’re not seeing this as much in the multi-story setting, except with a few notable examples in Chicago and Boston.

Repurposing an existing shell makes good sustainability sense, but will still require mechanical and electrical upgrades to make it meaningful for the IT workload requirements. Many of these requirements can be prefabricated offsite which can mean the possibility of a new data center with a minimal amount of on-site construction.

So it really depends, but it’s certainly worth exploring, because it can make sense. Siemens has experience working with clients that have taken this approach.

Data Center Frontier:  The range of available and proposed technologies to remediate looming need for sustainable onsite energy generation at large data center campuses ranges from still barely-within-reach SMR and green hydrogen speculation, to possibly more readily feasible and pragmatic means including renewable microgrids, clean fuel cells, and more efficient generator and battery practices and technologies. Which onsite power generation solutions present the best outlook for investors, developers and providers seeking to balance short- and long-term ROI considerations with the industry’s clear and present drive toward sustainability?

Mike Zapata, Siemens Smart Infrastructure USA: The choices here can be dynamic. The drivers really depend on the location, regulations, situation with the local grid capabilities, and financial impact. 

Onsite generation is primarily used to address power availability and then to support decarbonization. In general, we see data center operators owning these assets as a last resort to address these drivers.

Siemens has also been approached to explore DBOOM (Design, Build, Own, Operate, Maintain) models with respect to onsite generation, and we’ve had experience doing this in other industries.

That said, onsite energy storage is a fantastic way for an operator to participate in the local grid and get paid through frequency or demand response contracts.

We see several of our clients committing to more micro-grid type solutions, but usually in concert with other local or community needs to capture this benefit and promote their ESG credentials.

Hydrogen, particularly when generated with renewable power, is a potential game changer, but it’s still quite immature as a fully mainstream solution. The primary impediments here are cost, scale, storage and lack of infrastructure. 

Finally, SMR is an emerging discussion but likely not a short-term asset that a data center operator is able to own/operate and run through the regulatory paces, as well as a NIMBY [not in my backyard] challenge. 

In short, grid-scale battery energy storage, coupled with intermittent renewable generation in a microgrid configuration, has the most promise today.

Data Center Frontier: For providers of equipment to the North American data center industry looking to bring supply chains for critical infrastructure closer to their customers, what are the main opportunities going into 2024, geographical and otherwise, for an expansion of U.S. manufacturing capabilities?

Mike Zapata, Siemens Smart Infrastructure USA: Siemens is doubling down on our investment into North American supply chain to support our customers with respect to electrification, energy transition and digitalization. 

North America has proven there is a demand and scale of the customers to help justify such investments.  

Siemens has already announced several major investments of more than $500 million in U.S. manufacturing for critical infrastructure in 2023 to support high-growth markets. 

This also includes a focus on supply chain resiliency to help avoid the challenges learned from the pandemic.  

In every way, we’re using our investments and our portfolio to create productive and sustainable factories to meet current and future market demands and help create jobs in the process. 

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About the Author

Matt Vincent

A B2B technology journalist and editor with more than two decades of experience, Matt Vincent is Editor in Chief of Data Center Frontier.

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