Microsoft is spending about $130 million to build a new datacenter in Dublin, as it needs more room to run cloud services there, the company said on Thursday, Feb 23.

The expansion is a direct result of increased demand for cloud services such as Office 365, Windows Live, Xbox Live, Bing and Windows Azure in Europe, according to IDG News Service.

Microsoft's new datacenter will be next-door to its existing one in Dublin. Construction of the datacenter has begun, said a company spokeswoman, but she declined to say when it will enter service.

The new datacenter will be about a third the size of the old one, at approximately 10,400 square meters, and will have up to 13MW of total power available, compared to 16MW for its 28,100 square-meter neighbor.

That means the new datacenter will be able to accommodate servers with a power density of up to 1.3kW per square meter.

The increased power density will allow Microsoft to increase the number of servers per rack in the new datacenter, as long as it can cool them down enough to keep them running.

Last year a power outage in Dublin affected online services from Microsoft and Amazon, which also has a datacenter there, putting cloud reliability under the microscope. European customers of Microsoft's Business Productivity Online Standard Suite, the predecessor to Office 365, were affected by the power outage. Microsoft managed to get them back online after about four hours.

The new data center has its own power infrastructure, and can be self-sufficient for a considerable time, according to McGibbon. If there is an electricity failure, Microsoft has deals with diesel suppliers to keep the services up and running, he said.