The uninterruptible power supply hardware market is set to climb to more than $10 billion by 2023 driven by the rise of edge computing, significant global data center investments and the shift to lithium-ion batteries.
The worldwide UPS market reached $8.2 billion in 2018, up 6 percent compared with 2017, according to research and analysis firm IHS Markit. The market is expected to continue to grow over the next four years, surpassing $10 billion by 2023.
“For the UPS hardware market, 2018 represented one of the best years in nearly a decade,” said Lucas Beran, principal analyst at IHS Markit, part of Informa Tech. “That momentum has continued into the first half of 2019, with cloud and colocation data center deployments continuing in tandem with rising edge computing deployments.”
[Related: ‘Data Center Building Boom:’ Over 500 Hyperscale Data Centers Now Open]
Last year, hyperscale data center operators including Amazon, Apple, Google, Facebook and Microsoft broke the record for the most Capex spending on data centers in a single year with an astounding $120 billion. This level of spending on data centers and equipping those facilities with products—like UPSes—continued in 2019 with similar outlooks for years to come.
The largest colocation providers in the world, Digital Realty and Equinix, are investing billions this year in boosting their data center footprint. Cloud and colocation service providers deployed UPSes at the fastest rates in 2018, growing near double digits compared with 2017, according to IHS Markit.
Single-phase UPS revenue grew 4 percent in 2018 year over year, while three-phase UPS sales rose by nearly 8 percent. The three top global UPS market leaders are APC by Schneider Electric, Eaton and Vertiv, which accounted for 46 percent of market revenue in 2018.
Another major trend that is boosting UPS sales is edge computing as data centers have begun to move to the edge with the goal of keeping the traffic and processing local to reduce latency and enabling greater autonomy at the edge.
IHS Markit said edge computing is having a positive impact on market growth as enterprise UPS deployments at the edge are gaining momentum in retail and health-care applications. Research firm Gartner predicts that the edge will become a dominant factor across virtually all industries and use cases as it becomes empowered with more sophisticated and specialized compute resources and more data storage. Through 2028, Gartner expects a steady increase in the embedding of sensors, storage, compute and advanced artificial intelligence capabilities in edge devices that will all need to be powered.
In terms of UPS innovation driving growth, the adoption of lithium-ion batteries in place of traditional lead-acid options is helping.
UPS vendors began offering lithium-ion batteries toward the end of 2016, and 2018 marked the breakthrough year for adoption in data center applications despite supply shortages, according to IHS Markit. In 2018, more than 200 mWh UPSes were deployed, primarily in North America by large cloud and colocation service providers with UPS deployments above 500 kVA.
“The trend of lithium-ion battery adoption is accelerating in 2019, spreading to enterprise end users, UPS systems in the range of 100 to 500 kVA and even to some rack-based UPSes around 10 kVA,” Beran said. “Geographically, lithium-ion battery adoption is also growing in Asia and, to a lesser degree, in Europe, the Middle East and Africa.”
As adoption of lithium-ion batteries rises in data centers, the benefits of the technology will allow data center operators and managers to proactively use their energy footprint and to generate revenue through utility services such as frequency regulation.
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