Nordics push to become European datacentre hub

Do growing datacentre investments in the Nordic countries by IT giants really signal the region is the best place in Europe to site servers?

Big beasts are colonising the wilderness, it seems. From Google to Facebook to Microsoft, a growing number of companies are investing in datacentres in the Nordic countries, wooed by low energy costs and free cooling. 

A trade delegation from Sweden outlined the benefits of Nordic datacentres to global enterprise infrastructure professionals at the recent 7x24 Exchange conference in Texas. But is the region really set to become a strategic European hub for data traffic?

The past year has certainly seen much interest in the Nordic countries. In early November 2013, European datacentre operator Telecity acquired Finnish provider Academia, primarily to gain control over its Helsinki datacentre. The move came just four months after the company purchased another Finnish datacentre operator, Tenue Oy.

In September 2013, communications giant Ericsson announced it was investing almost £682m to build two modular datacentres in its native Sweden, as well as a third in Canada. In the same month, Microsoft said it planned to build a £156m datacentre in Finland following its purchase of mobile phone manufacturer Nokia. 

In June 2013, Facebook’s widely publicised Lulea datacentre, located on the edge of the Arctic circle in Sweden, opened for business

Meanwhile Google – whose establishment of a datacentre in Hamina, Finland, two years ago initially prompted wider interest in the region – is also ramping up its investment. In early November 2013, the web giant announced it was spending £407m to increase the datacentre’s capacity, primarily to handle more mobile video. 

Other companies have also announced prominent datacentre investments in the Nordics in 2013, including colocation provider Digiplex and Russian search giant Yandex.

Green credentials attract datacentre investment

The annual Data Centre Risk Index 2013, published in May by consulting firms Cushman & Wakefield, Hurleypalmerflatt and Source8, noted that while the US and Britain are still deemed the lowest-risk locations for datacentres, the Nordic countries are rapidly rising up the ranks. 

Sweden was cited as the third safest place in the world to base a datacentre, up from eighth place the previous year. Iceland, Norway and Finland featured in the seventh, eighth and ninth positions respectively. 

For some companies, the attractions are clear. Naturally low temperatures mean cooling costs are minimised. In addition, because the Nordic countries are powered primarily by sustainable, low-cost energy sources such as hydroelectricity and wind power, firms can dramatically reduce their carbon footprint and energy costs by moving operations there. Proximity to the Russian market could be another draw for some providers.

The Swedish Data Center Initiative, set up by trade council Business Sweden, claims these developments signal the region is becoming a major hub for European datacentres. 

“We are seeing the confirmation of the Nordics as an attractive, growing market in Europe, and a prime location for strategic datacentre hubs," said Tomas Sokolnicki, investment advisor and project manager for the group. 

"Our region has become a symbol for some of the biggest green initiatives in the industry. When industry leaders like Facebook and Google show the way to secure green and stable locations at affordable prices, many other players direct their gaze in the same direction,” he said.

"If you're doing low-latency trading of any kind, countries like Iceland, Finland and Norway are probably too far afield."

Andy Lawrence, 451 Research

Andy Lawrence, vice-president of research at industry analyst 451 Research, agreed the Nordics have a strong environmental attraction for operators. 

“There are a number of good reasons why companies would be looking at the region. Facebook certainly needed to open a large datacentre in Europe and it would have been a very attractive location for a number of reasons, not least of which is the availability of cheap, reliable power with a high renewable energy content. Because the climate is very cool, it's also very likely companies can get away without having to use traditional cooling systems,” he told Computer Weekly.

But Lawrence also believes it is far too early to interpret the flurry of Nordic datacentre investments as a major trend. 

“Microsoft is opening datacentres all over the place, not just in the Nordic countries. The same is true of Telecity. I’d say only a minority of providers would consider the region as a major datacentre hub,” he said. 

He thinks some Nordic countries’ ambition to become a strategic European datacentre hub are likely to be held back by the fact that many providers serving Western Europe will not accept the levels of latency their customers are likely to experience if servers are located in the far reaches of Northern Europe. 

“If you’re doing low-latency trading of any kind, countries like Iceland, Finland and Norway are probably too far afield. When most colocation providers build datacentres, they don’t always know who their major customers are going to be. It’s probably safer for them to locate their facilities within a low-latency distance of major Western European trading hubs,” said Lawrence.

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