The price of a data centre rack rose by an average of 8.5 percent across Europe last year, with more price increases expected in 2009, according to a UK-based tracking company, Tariff Consultancy.

The latest version of its Data Centre Price Tracker survey measures the average cost of a data centre rack in fourteen European countries, namely Austria, Belgium, Czech Republic, Denmark, France, Germany, Ireland, Italy, Netherlands, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

It found that the UK and Austria now have the highest average rack prices in the survey at 1,024 euros (£906) per month. However some other countries have a higher headline figure because of specific local conditions. For example, 1,300 euros (£1,150) per month was recorded in Denmark; 1,040 euros per month (£920) in Switzerland, and 1,029 euros (£910) per month in France.

Italy and Germany were the lowest average priced country for rack space with 545 euro (£482) per month, and 673 euros (£595) per month respectively.

According to Keith Breed, the report's author, Denmark is a small market where the local telecom charges are higher, which in turn effects rack prices and skews the figures. France is apparently high because most data centres are built in the Paris region, which is prone to network connectivity and bandwidth bottlenecks. Meanwhile, Germany has a lot of local data centre capacity with facilities spread right across the country.

Countries that saw the highest per rack price rises in 2008 include Portugal (30 percent), Denmark (24 percent) and France (17 percent).

Tariff Consultancy blames the price rises on the fact that data operators are increasing their prices in order to cover the costs of building newly furbished space, as well as the introduction of new types of Rack product, "which reflect the costs of providing enhanced power which increases the average price per rack."

But isn't new technology supposed to be more energy efficient? Well not necessarily it seems. "Because of virtualisation, processing power per rack is increasing," Breed told Techworld. "This means more heat is generated, but this is not a tremendous thing, as data centres are becoming more efficient. However the trend, from what data centre operators have told us, is that watts per rack has increased, from around 1 to 2 kva per rack, with more and more racks coming with say 3 to 4 kva."

So it seems that the main price determinant for a data centre operator is now the cost of power rather than the actual physical space cost. Tarrif said that industrial electricity recorded a 20 percent price rise during the past 12 months.

And looking forward to 2009, it seems that things are not likely to get much better, especially considering data centre capacity in the UK will be increasingly stretched during the year due to continued customer demand.

Tariff Consultancy predicts "moderate price increases in most countries" during the year. "Data centre operators continue to report strong customer demand despite the downturn, as enterprises continue to outsource their IT infrastructure to a third party provider as the cost of managing their in-house facility continues to rise."

"The enterprise IT customer is becoming much more savvy, and the increasing use of web servers and e-commerce, often means IT is more likely to outsource those servers to a third-party hosting specialist rather than try and manage the servers themselves," said Breed. "People are not being bullish, but we expect to see growth continuing. The recession is not affecting things."

Operators will also be seeking an economic return on the cost of their new data centres that come online during the year, especially as the cost to new build facilities in order to meet customer demand continues to rise.

Tariff Consultancy said that the scale of the investment now needed was illustrated after TelecityGroup's new data centre in Stockholm cost 33 million euros (£29 million), whereas Equinix's development in London cost an eye-watering 110 million euros (£97 million).

The Data Centre Price Tracker is a subscription service published every quarter. A one year subscription single user licence costs £895.