Nordic green energy IT strategy gains momentum

The Nordic countries are building strong IT sectors around their green-powered datacentre infrastructures

The Nordic countries are competing for international investment in IT projects, using datacentres powered by green energy as the foundation for digital hubs.

All Nordic governments, but especially those in Denmark and Norway, are strengthening their low-energy-cost credentials to lure the biggest names in global IT to the region.

According to a report by the Nordic Council of Ministers, the Nordic datacentre sector alone is expected to attract investments of between €2bn and €4.3bn a year by 2025. Sites have been built that are capable of hosting an additional power capacity of 280-580MW a year up to 2025.

The Nordics’ appeal is bolstered by the broad availability of IT skills across the region. Meanwhile, Nordic governments are introducing tax measures to help reduce startup costs on capital-intensive projects such as hyperscale datacentres. Tax incentives launched in Finland, Norway and Denmark in 2017-2018 were designed to encourage companies to develop and test digital innovations.  

The added value of the Nordics’ cold climate, and access to an abundant supply of low-cost renewable energy, has sparked a surge in mainly datacentre-focused investment by global giants, including Microsoft, Equinix, IBM, Google, Facebook and Apple, since 2016.

Equinix’s €18m International Business Exchange in Helsinki, which is due to open in the second quarter of 2019, will use 100% green energy sourced from local biofuel plants and offshore wind farms.

In Denmark, meanwhile, the government is supporting an ambitious project by the City of Copenhagen to build nine interconnected artificial islands in the Avedøre Holme harbour zone to house IT innovators and datacentre enterprises. One of the project’s core objectives is for companies locating to the tech islands to use electricity sourced from renewable wind, solar and biofuel facilities.

Norway, Sweden and Finland are following suit, creating IT investment zones powered by renewable energy and supported by cold climate low-cost energy that appeals to large-scale energy users such as hyperscale datacentres. 

The Copenhagen project, backed by Danish public pension funds, has reached the planning and development stage. The project will provide an estimated three million square metres of commercial space for a targeted 380 enterprises to deliver about 12,000 new highly skilled jobs.

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Construction on the project, which the Danish government calculates will add €8bn to the national economy – equivalent to 2.5% of GDP – is due to begin in 2022.

Rasmus Jarlov, Denmark’s minister for industry, business and financial affairs, said: “We expect the project to have a high self-financing content by selling land lots on the different islands. The emphasis is on high-tech innovation and IT operations, but it will have a broader mix of commercial operations, too. The next stage is to have this project approved by parliament.”

Copenhagen’s nine-island project has the potential to become Denmark’s Silicon Valley, said Brian Mikkelsen, CEO of Dansk Erhverv, the country’s chamber of commerce.

“We see the project as a kind of European Silicon Valley,” he said. “It will enable Copenhagen and Denmark to compete with major European IT-innovating capitals like Amsterdam, London and Stockholm. It will also help us to attract more green digital transition jobs as more enterprises gravitate to this near-city centre location in the Danish capital.”

Nordic inward investment strategies for IT are demand-led. Google, which will invest €603m to build a second datacentre near the Danish town of Aabenraa, is locked into establishing sustainable energy-based facilities. Its first datacentre in Denmark, in Fredericia, is due to open this year, and the Aabenraa facility is set to become operational in 2021.

Google’s demand for sustainable, low-cost green energy to power its Nordic datacentres is mirrored by other global heavyweights Apple, IBM, Amazon and Facebook. Apple is building datacentres in Viborg and Aabenraa, while Facebook is constructing a mega-datacentre in Odense and Amazon is currently scouting datacentre locations in Denmark.

Denmark’s ministry of industry, business and financial affairs has estimated that the total power consumption of datacentres operated by Apple, Facebook and Google could reach 7.5TW-hours by 2030, which is equivalent to the electricity consumption of 1.9 million households.

To facilitate demand for green energy, Denmark is expected to add 1,000 to 2,000 offshore wind turbines by 2030.

Strategic joint ventures

The attractiveness of the Nordics as a green destination for IT projects is also yielding another dividend – strategic joint ventures between global IT companies and leading local corporations. This trend began with a partnership agreement between Microsoft and Equinor (formerly Statoil) in 2018.

The collaboration will see Microsoft deliver expertise to accelerate Equinor’s IT development and establish new datacentre regions for the energy company in Stavanger and Oslo. For Equinor, the partnership will help shape the development of energy industry-specific digital services. It will also enable a faster transition to the cloud and adoption of next-generation IT.

“Equinor’s ambition is to become a global digital leader within our industry, and a cloud datacentre in Norway will simplify and accelerate our adoption of the cloud,” said Åshild Hanne Larsen, Equinor’s CIO. “With Microsoft on board, we can get to where we want to go faster and with greater innovative value. Ultimately, this digital journey is about delivering safer, more secure and efficient operations.”

Microsoft plans to open four datacentres in Norway in 2019. The new facilities will be used to run services for Azure, Office 365 and Dynamics 365. Two of the datacentres will be located in Oslo and two in Stavanger.

Guaranteed low-cost energy

The Norwegian government is scaling up plans to ensure that large-scale IT and datacentre projects have access to guaranteed low-cost green electricity, said Torbjørn Røe Isaksen, Norway’s trade and industry minister. Some 98% of Norway’s electricity is generated from renewables, with hydropower the main source.

“Our goal is simple – we want Norway to thrive as a hub for IT and digital innovation,” said Isaksen. “Creating conditions under which datacentres and cloud services can flourish is an essential part of our forward-looking strategy. It is also important to ensure the competitiveness and productivity of businesses in Norway.”

Norway launched its national datacentre strategy, Powered by Nature, in February 2018. The strategy is now a fundamental part of the country’s industrial policy to attract datacentres and international IT-related investments to the country.

Sweden’s green strategy for attracting international IT capital projects is based on an integrated plan to provide foreign investors with site location support, high-standard connectivity, reliable fibre infrastructure, robust power grids and low-cost renewable energy.

Also, datacentre operators in Sweden are able to capture and reuse excess heat and sell it back to the grid. Through a mix of hydro, wind and biofuels, almost 100% of the country’s power is carbon-neutral.

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