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Demand for data centers is thriving, how can we keep up?

22 January 2021
The Nordic region has crucial energy advantages that businesses should take into account - sustainability, cost, availability.
Demand for data centers is thriving, how can we keep up?

The continuing growth in cloud deployments, plus the acceleration in big data fueled by IoT, 5G, and Industry 4.0, is putting pressure on data center capacity. In fact, IT research firm Gartner expects data center spending to hit $200 billion in 2021, a 6% increase from 2020, driven by hyperscalers. But can the large, established markets continue to support this growth?

Power issues in particular are demanding that hyperscalers and large enterprises look more carefully at where they make their data center investments. The Nordic region has crucial energy advantages that businesses should take into account, including cost, availability, and sustainability. Increasingly it makes more sense, commercially and ecologically, to store data close to where the power is.

With some of the lowest energy prices in Europe or indeed the world, it makes commercial sense to locate heavy data and compute loads in Nordic data centers.

According to EuroStat, Norway has the lowest cost Energy in Europe at 0.04 Euro per KWh, compared to double that in Germany at 0.08 Euro per KWh. Sweden and Denmark are also among the lowest tariffs both below 7 cents per KWh. With the huge power drawn by today’s hyperscale data centers these low rates translate into millions of Euros in savings every year.

But cost might not even be the most pressing issue. Hyperscale customers, and enterprises, need to know that they can expand their footprint in any location to accommodate growth. Sadly, for much of Europe this is increasingly difficult. The available generation capacity to support ballooning energy demands is simply not there. This is not a problem in the Nordics. Not only does the region benefit from plentiful renewable energy, but its Governments have committed to invest in new sustainable power generation and distribution.

Power in the Nordics is also amongst the greenest available. And as public, political, and customer pressure increases, the sustainability not only of data centers, but the digital services they support, will be scrutinized. The moral and reputational pressure to get to Net Zero carbon will become intense and locating a data center in the Nordic region, with its combination of a cool climate and some of the world’s cleanest power, will help meet this essential challenge.

But aren’t the Nordics too remote from large populations to be useful; won’t latency destroy the business case for many digital services? Not at all. There are many sites that can provide the ‘edge’ facilities needed to serve the major urban populations of Oslo and Stockholm as well as secondary cities. These sites are among the best connected in Europe, with fiber connections via multiple carriers connecting across Europe. Planned new fiber connections will soon create additional high-speed routes to the USA and China.

More importantly, for many of the emerging high-density users of data centers, latency is not always an issue. High-Performance Computing and AI are huge consumers of power, and increasingly at the heart of digital transformation across industries. But the heavy data-crunching and analysis seldom has to be close to customers or end-users. It makes sense to locate these resources in facilities where low cost, low-carbon energy is plentiful, and this is diving intense interest in the Nordic markets.

Finally, with today’s hyper-growth rates, time is of the essence. Any customer, be it a hyperscaler or a corporate, wants to get their data center operational as fast as possible to meet demand, transform its business, and serve its customers. Speed to market is determined by a number of factors including, availability of land, local political and regulatory environment, and the availability of skilled human resources to plan, build, and manage a new facility.

Read more in our whitepaper, “10 Reasons to Locate Your Data Center in the Nordics.”

Blog by International Sales Director Joachim Kauppi

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