Cheap energy and green credentials lure business to Iceland datacentres

As European businesses are looking to reduce their carbon footprint, many are turning to Iceland to build datacentres

As growing numbers of European businesses look to reduce their carbon footprint, many are turning to Iceland to build datacentres and make use of cheaper energy and natural cooling resources to improve their green credentials.

“A fifth of datacentre costs are spent on power and half of that is used for cooling. But in Iceland, businesses can use free-air cooling all year round and save on cooling costs,” said Einar Hansen Tomasson, project manager at Invest in Iceland, the government body that aims to attract foreign direct investment to Iceland.

In addition to using free air cooling, Icelandic datacentres are powered using renewable energy with natural hydro and geothermal energy resources.

A Pricewaterhouse Coopers study of long-term datacentres found that the operating or running expenditure of a 10,000ftdatacentre in Iceland over 15 years is $130m cheaper than running it in the UK, according to Invest in Iceland.

“You would expect the capital expenditure to remain the same as it would be the same number of space and servers, but running costs include energy and Iceland offers dramatic savings in the long run,” Tomasson said.

While cost is one of the major factors attracting datacentre investment in Iceland, carbon footprint is also forcing European datacentre owners to consider Iceland, said Thordur Hilmarsson, director of Invest in Iceland.

“Carbon footprint is beginning to hurt now,” Hilmarsson said. “As carbon taxes begin to bite, companies are looking at Iceland as a long-term option to demonstrate their commitment to green IT.”

“Everything we put in the grid is 100% renewable which can give businesses a truly green datacentre,” Tomasson said.

While natural energy resources and free-air can be used to cool datacentres, an IT facility also needs power to keep equipment running. But power too is cheaper in Iceland than in the UK and continental Europe.

“Power in Iceland costs 3-3.5 cents per kWh (kilowatt per hour) whereas it costs around 7 cents in central Europe and about the same in the UK,” Tomasson said. This is because the power is made up of natural hydro and geothermal energy.

Also, utility prices in Europe are rising, he said. “In Iceland, datacentre builders can lock energy prices for 20 years and have a clear understanding of their operating expenses in the long run.”

But for datacentre operators, low latency, high resilience and minimal downtime are other crucial factors while selecting the datacentre site.

Iceland datacentres offer 99.999% uptime, said Kristinn Haflidason, also a project manager at Invest in Iceland. “That means a downtime of 5.3 minutes in a year. And power companies are willing to put 99.999% uptime in the contract agreement.”

"We are seeing a lot of interest from Germany, UK and the US," Tomasson said.

Verne Global, a wholesale supplier of datacentre space, said it is expanding its facilities in Iceland, with 500m2 of UK-made modular datacentres.

The facility will not use water cooling or mechanical cooling equipment, such as compressors. Instead, it will use power from Iceland’s renewable energy sources and free-air cooling technology to minimise carbon emissions.

Despite its attractiveness, currently just 26% of Iceland’s GDP comes from FDI. Currently, only medium-sized businesses and co-location facilities are building datacentres in Iceland while bigger IT companies still prefer Nordic countries such as Sweden.

Read more on Datacentre energy efficiency and green IT