Alamy via Reuters Connect
- Safeguards for data protection
- Saudi Arabia ‘ideal location’
- Renewable energy, regulatory agility
A regulatory framework to protect foreign-owned data centres set up in Saudi Arabia is being planned that will treat them in a similar way to embassies, as the kingdom seeks to become a global destination for the industry.
The Saudi finance minister, Mohammed Al-Jadaan, speaking at the World Economic Forum in Davos, outlined the country’s plans to attract global operators by leveraging what he said were its competitive advantages in renewable energy, land availability and regulatory agility.
Al-Jadaan said the aim was to create a secure and efficient environment for companies to process data in centres located in Saudi Arabia and then export it back to their home markets and beyond.
He said Saudi Arabia’s competitive advantages made it an ideal location for artificial intelligence (AI) infrastructure.
However, he acknowledged the concerns among Europeans and Americans regarding relocating data centres to other countries, primarily tied to sovereign data protection issues.
“For AI infrastructure, you need a lot of energy, preferably clean energy like renewables, and significant land,” he said.
“We have the cheapest solar power in the world, ample government-owned land and very agile government policies. Licensing can happen in a very short period of time, unlike in the US.
“If you put a reg [regulatory] framework around it, which we are doing at the moment, we don’t need to export energy to them – they can use the energy where it is in Saudi and they can export their data,” he said.
Under the regulations, data centres will be “fully protected, like embassies,” Al-Jadaan said.
The kingdom is also building the necessary infrastructure to support data operations, including extensive fibre optic networks, he said.
Saudi Arabia’s push to attract data centre operators aligns with its broader Vision 2030 plan, which aims to reduce reliance on oil revenues by diversifying into sectors such as technology, renewable energy and AI.
The country needed to think not about AI alone, but “where is our competitive advantage within the value chain of AI,” Al-Jadaan said. “If we are not careful, we could be left behind.”
The data centres market
A data centre is a facility that provides the critical infrastructure required for organisations to manage their IT operations and services, such as cloud computing, enterprise applications, and data storage.
The global data centre market size was valued at $195 billion in 2022 and is projected by Grand View Research to grow at a compound annual growth rate of about 11 percent between 2023 and 2030.
The Middle East data centre market is projected to grow from $5.6 billion in 2023 to $9.6 billion by 2029, a Turner & Townsend report said.
Saudi Arabia has 22 active co-location data centre facilities and more than 40 under construction, Turner and Townsend said.
Many Gulf countries are already struggling to keep up with demands for capacity at their date centres.
A Knight Frank report showed data centre vacancy across the UAE had dropped to just 9 percent in the third quarter of 2023, with AI ventures typically eating into demand.