Electricity problems in Amsterdam could hamper datacentre growth

A shortage of power availability in Amsterdam might make businesses look elsewhere in the Netherlands to site datacentres

Amsterdam has become one of Europe’s biggest datacentre hubs, with excellent connectivity and low energy prices making it an attractive location.

But a consequence of this is that some parts of Amsterdam suffer from power supply shortages.

The datacentre industry has been growing rapidly in the Netherlands over the past decade, and Amsterdam has seen datacentre after datacentre popping up around the city. According to a Dutch Data Center Association (DDA) report released this week, the Dutch capital is now Europe’s second-biggest datacentre hub. Only London ranks higher.

A small selection of recent datacentre news from the Netherlands illustrates this growth: Google announced a €500m expansion of its datacentre in Eemshaven; colocation provider Interxion built its 10th datacentre in the Amsterdam region, spending €155m; and Amazon was reportedly planning to build a datacentre 40km north of Amsterdam.

So what makes the Netherlands, and especially Amsterdam, such an attractive location to build datacentres? For Stijn Grove, managing director of the DDA, three reasons stand out. First, there’s the geography. “We are centrally located between big markets such as the UK, Germany and Scandinavia,” he said. “In terms of data logistics, we’re at the heart of it.”

Another major factor is the low price of energy in the Netherlands compared to, say, Germany and the UK. Also, the Dutch government gives substantial tax breaks to companies that use green energy.

Thirdly, the Dutch enjoy excellent broadband connectivity. The Netherlands ranks first for connectivity in the EU’s Digital Economy and Society Index. Thanks to the country’s many underground fibre connections, data can travel quickly – Frankfurt, Paris or Hamburg are just milliseconds away.

Eckhardt Fischer, a senior research analyst for European infrastructure at IDC, said another factor that favours the Netherlands is its temperature. “On average, for every kilowatt that goes to computation, another one goes to cooling,” he said. “The Netherlands has a mild climate, which brings down cooling costs.”

Fischer sees a trend towards building datacentres in ever-cooler locations. Facebook recently opened datacentres in Denmark and Sweden, and in Norway there are plans to build a 64-hectare datacentre, the biggest in the world.

Although the Dutch have a slightly warmer climate than the Nordic countries, they compensate for that with connectivity, said Fischer. “If you add it all up, the Netherlands ranks very highly.”

Challenges ahead

But the growth of the Netherlands’ datacentre market also comes with its challenges. Last month, the DDA publicly warned the government that “acute” power supply problems were putting further expansion of the datacentre industry at risk. Expanding electrical capacity was especially problematic in the Amsterdam area, it said.

In a written response, the Dutch minister of economic affairs and climate policy conceded that in the area around Schiphol, south of Amsterdam, no new datacentres could currently be powered.

The power shortage results from a delay in building a new transformer station in the town of Rijsenhout. Local residents fear the station will produce humming sounds, ruin the view and cause house prices to fall, and have succeeded in delaying the planning process.

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The problem in the Amsterdam area is not a lack of energy or a lack of green energy – the Dutch have more than enough of that on offer. The problem is that the existing infrastructure does not have the capacity to deliver enough energy to new datacentres, and in an urbanised area such as Amsterdam, it is hard to find space for new power stations.

The DDA’s Grove called for the government to urgently come up with an emergency plan for expanding the power grid. “The whole cycle of upgrading the grid takes five to seven years, while a datacentre could be up and running in less than two years,” he said.

Companies wanting to build a datacentre in the Netherlands could also look outside the Amsterdam area. Not many have done that until now, with the Amsterdam area accounting for 71% of the datacentre floor space in the Netherlands.

Go north

Eemshaven, a harbour town in the northernmost part of the Netherlands, is one location that could profit from Amsterdam’s energy woes. The town became big news in 2014 when Google chose it as the location of one of its four datacentres in Europe. Then in March this year, Google announced that it would expand its Eemshaven datacentre, making it one of the biggest in the Netherlands, with an estimated 65MW power consumption.

Recently, Eemshaven has been attracting more interest from companies looking to build datacentres. Boosting the town’s ambitions, a second fibre-optic connection between it and nearby Groningen will be put to use later this year. The cable connects Eemshaven to the Amsterdam internet hub via two different routes, offering companies a redundant data connection. 

With its improved connectivity, Eemshaven could be a viable alternative to Amsterdam, said Wubbo Everts, a business development manager in the northern provinces. “The energy market is locked in to Amsterdam. Instead of looking to Frankfurt or Paris as an alternative, I say: look at the rest of the Netherlands.”

The latency between Amsterdam and Eemshaven is less than a millisecond, said Everts. He is also quick to point out Eemshaven’s other benefits – an undersea fibre-optic cable to Denmark, an abundant supply of green wind energy, and lots of ground to build on. “Americans love to have a lot of space,” he added.

The DDA’s Grove agreed that for some data companies, seeking a location outside the Amsterdam hub could be a viable option. But for most, Amsterdam is still the best place to be. “So many cloud applications nowadays talk to each other and customers permanently,” he said. “It’s not packages being sent just once. Then it makes much more sense to be in a hub with other data companies nearby.

“Sending data from Amsterdam to Groningen and back is not the cheapest option – and also not the best, because every millisecond counts in the internet economy.”

That is why Grove says it is vital for the Netherlands’ digital economy for Amsterdam’s power infrastructure to be improved quickly. “The datacentre business has been growing under the radar for a very long time,” he said. “Now, with data being so fundamental to the modern economy, it is time for a greater awareness of what this new industry needs.”

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