Challenge

Germany faces significant challenges in balancing digital infrastructure growth with energy transition goals while maintaining digital sovereignty. The Ministry needed evidence-based insights on:

• The economic value creation chain of data centers

• Quantifiable employment and tax impacts of data center investments

• Future demand for digital resources through 2045

• Strategic considerations for digital sovereignty

Our Approach

Our team took lead responsibility for analyzing the economic dimensions (Chapter 3) and future outlook (Chapter 5) of the German data center market:

1. Economic Analysis (Chapter 3):

   • Developed a detailed value creation model examining three key tiers: data center buildings, IT infrastructure, and IT services

   • Conducted primary research through stakeholder interviews and surveys to quantify employment effects across the value chain

   • Analyzed tax implications and regional economic impacts of different data center business models

   • Examined market access challenges and competitive dynamics in the cloud infrastructure space

2. Future Outlook and Digital Sovereignty (Chapter 5):

   • Created a quantitative model forecasting digital resource demand through 2045 based on digitalization trends across economic sectors

   • Analyzed digital sovereignty considerations across the entire value chain

   • Developed strategic recommendations for positioning Germany in the global digital infrastructure landscape

Key Findings

Economic Impact and Value Creation Chain

• Employment Effects: We quantified that German data center operators create approximately 9 jobs per MW of data center operation, while international operators generate only about 3 jobs per MW in Germany

• Value Chain Analysis: The value increases substantially along the chain:

  • Data center facilities (primary level): 3-9 employees per MW

  • IT infrastructure operations (middle level): 3-25 employees per MW

  • IT services (highest level): 35-140 employees per MW

• Tax Revenue: We identified that tax revenue structures vary significantly depending on business models and corporate structures, with local municipalities often receiving limited benefits despite providing land and power infrastructure

• Market Structure: We determined that the largest colocation providers in Germany are predominantly foreign-owned, with the cloud marketplace dominated by closed systems from international providers

Future Outlook and Sovereignty

• Digital Resource Demand: Our modeling projects that Germany will require digital resources equivalent to 19 million standard server equivalents by 2045 to achieve a 39% economy-wide digitalization rate

• Efficiency Scenarios: We created multiple scenarios showing how software and IT infrastructure efficiency improvements could significantly affect resource needs

• Sovereignty Analysis: We developed a structured framework for evaluating digital sovereignty across data sovereignty, operational sovereignty, and infrastructure sovereignty dimensions

• Strategic Options: We identified approaches for strengthening Germany's position through regional digital ecosystems and European-level strategies

Impact and Recommendations

Our analysis informed several strategic recommendations that were incorporated into the final report:

1. Regional Digital Ecosystem Development: Creating integrated regional ecosystems combining data centers, IT infrastructure providers, and IT service companies to maximize value creation and employment benefits

2. European Digital Resource Marketplace: Establishing an open European marketplace for digital resources to increase competition and reduce dependence on closed systems from global hyperscalers

3. Targeted Support for Local Operators: Improving capital access for small and medium-sized IT infrastructure providers to strengthen the German-owned segment of the market

4. Strategic Investment in Training: Developing specialized training programs focused on large-scale IT infrastructure operations to address identified skills gaps

5. Digital Sovereignty Framework: Implementing the developed evaluation framework to guide policy decisions on critical digital infrastructure

Conclusion

Our economic analysis and future outlook components provided the Ministry with data-driven insights into both the current state and potential development paths for Germany's data center landscape. By quantifying employment impacts and value creation across the entire digital infrastructure chain, we established a clear connection between data center development strategies and broader economic benefits.

The work has contributed to ongoing policy discussions about balancing energy efficiency regulations with economic development goals, providing a nuanced understanding of how different types of data center investments yield varying levels of local economic impact.