Investing in Nordic Data Centres
Wall Street Journal Custom Studios article with DigiPlex Chairman Byrne Murphy on why more companies are choosing to invest in Nordic data centres.
“There’s a global race to become the destination for tech companies to deploy the data-center networks that deliver digital services,” says Byrne Murphy, chairman of DigiPlex, a data-center operator based in the Nordic region. This network of data centers is essential to meeting rapidly growing volumes for all our digital activity, whether we’re surfing the Web, streaming videos or accessing the cloud. The Nordics—Denmark, Finland, Iceland, Norway and Sweden—are increasingly winning that global race. In the past three years this has become the destination of choice for today’s global tech giants, who have all built, or are building, hyperscale facilities in the region. More and more tech companies are sending their global scouting teams there.
“Countries in the region now have the help of government agencies,” says Philip Low, chairman of the BroadGroup consultancy, which authored the report “Data Centers Nordic.” He says competition among governments in the region is incentivizing infrastructure investment and policy initiatives. Sweden introduced a 97% tax cut on electricity costs for data centers from 2017 and Norway has matched those tax cuts, while also investing money into laying new cables.
Such initiatives sit alongside four other advantages for the region both natural and economic, says Milan Radia, managing director at London-based research and analytics firm 2020 re:think. “Number one is that energy cost in the region is low, and the hyperscale technology companies are going to need massive incremental compute power over the next decade. Two is the availability of renewable power, and all of the large technology players are under pressure to demonstrate their green credentials. Third, the Nordics have a long-established technology culture. Indeed, information technology outsourcing in the Nordics has always been ahead of the rest of Continental Europe. Finally, you now have this high concentration of high-value customers and long-term agreements to drive investment.”
The greatest operational cost for a data center is the power needed to cool its servers. When you combine one of the least expensive markets for power in the world with a regime where that power is virtually untaxed, the value of pursuing a strategy in the Nordics can be significant.
“We estimate a firm deploying 100 megawatts will save approximately $1 billion over 10 years, just by choosing to place a data center in Sweden or Norway versus a U.K. equivalent. That’s based on the difference in the cost of power alone, and a significant saving for even for the largest companies in the world,” says DigiPlex’s Mr. Murphy.
The region’s naturally cool climate contributes both a cost saving and a design feature for a new generation of ultra-efficient facilities. “A big part of the economic benefit of going into a market like the Nordics is how efficiently you can build and run your sites, especially from an energy and cooling perspective,” Mr. Radia says.
For example, when one tech giant recently constructed its first facility outside the U.S. it chose to locate it in Sweden. In so doing, it found the reliability of the local hydroelectric power supply and the presence of natural cooling enabled it to reduce by 70% the number of backup generators it installed.
Making clever use of the natural environment has driven down the industry benchmark—called Power Usage Effectiveness (PUE) - which measures how much energy is used by the facility, divided by how much is used by the equipment in it: while much of the industry struggles to achieve ratings of 1.5, in the Nordics it is not uncommon to see data centers with PUE of 1.1 to 1.2.
This is a large part of DigiPlex’s appeal to investors who never previously considered the cold reaches of Northern Europe and the Arctic Circle. “We take maximum advantage of the climate with our Air-to-Air cooling solution, which deploys huge fans that pull in cool air from outside and distribute it to the many thousands of heat-generating servers housed in each facility. The design works in concert with nature to save energy, reduce costs and decrease the environmental footprint,” says Mr. Murphy, adding that the local advantages in expertise and connectivity his company taps into will also increase long-term savings.
Read the complete online article by WSJ Custom Studies here