Weekly Cover | Competition to host your data is tough. Sub-Arctic territories that once assumed their cold climate was advantage enough are now finding they must differentiate themselves
In order for your computer to be thinking well, it needs to be kept cool. The information it is thinking about, however, need not be kept sitting next to you. It can be in another room, another building – or in the case of internet data – on an entirely different continent.
This is something that computing firms like Facebook and Google have long since discovered. As the price of energy goes up, the similarly increasing speeds at which data can be transferred has made it possible for some of the world’s largest number crunchers to open so-called data centres in places where keeping cool requires little energy.
“People don’t really know or care where the data centre is,” said Tate Cantrell, of Verne Global, which operates a data centre in Keflavik, Iceland, during the recent Bloomberg Enterprise Technology Summit.
Once you remove location from the equation, cost and risk become the dominating factors, he said.
Data centres are essentially enormous warehouses filled with row upon row of computer servers. By moving data centres north, companies that run them can pump in outside air to keep the computers cool – thus eliminating the need to chill them using power-hungry cooling systems. This also eliminates the need to have backup power on hand, further driving down costs.
This can slash power consumption by as much as 80%, as was the case for BMW, the German carmaker, which recently moved its data storage to Iceland.
But building them in places like Finland, Sweden, Norway and Iceland has proven attractive to computer firms for a number of reasons beyond their cold location.
In the most recent Cushman & Wakefield and hurleypalmerflatt Data Centre Risk Index, an annual ranking of 30 countries on everything from connectivity to labour costs, all four countries finished in the top 10. Sweden was the top finisher in the region, behind only the US and the UK overall. Iceland, Norway and Finland finished seventh, eighth and ninth, respectively.
“This made the Nordics one of the most prominent locations on the index,” the report stated, underscoring that factors like business environment, strong connectivity, abundance of sustainable energy and low risk of natural disasters meant the region was well suited to hosting data centres.
Yet even with their high rankings, particularly when it comes to clean power, the four countries are aware they must gear up by differentiating themselves from other countries – not least each other – if they hope to woo the next big client. In a region where cold air and green power are de rigueur, location might wind up being a significant part of the equation again.
Iceland, for example, has an advantage over other Nordics by being midway between America and Europe. For computer users, that means less latency – the amount of time that passes between you pushing a button and the computer reacting – than if it were further away from one of the population centres.
Norway, thought slightly closer to Europe, also likes to point to location when marketing its showcase data centre, if for a slightly different reason. Perhaps the most dramatic Nordic data centre, the Green Mountain facility, in Stavanger, is built into a mountainside that once housed a Nato weapons-storage facility. Security – be it physical or in the form of data protection – is the least of its tenants’ worries.
Sweden is already home to one Facebook data centre. The facility in Luleå is, as elsewhere in the Nordics, cooled by eco-friendly power, in its case hydro. But the facility adds to its environmental charm by using the heat the computers generate to warm the facilities offices during the winter.
A second Facebook centre is on the way in Luleå. Hosting two of the social-media titan’s six data centres will go a long way to securing the town – located on the Baltic coast – a reputation as a good place to plant your data centre.
Landing another centre from anyone, however, might require more than Swedish charm or clean energy. After being beat out by Finland in 2011 to host a Google data centre – reportedly due to higher import taxes – Swedish officials realise they might need to offer a more traditional incentive: tax cuts.
The country this week said it had begun to renew its energy tax rate for data centres, currently 15th on the index, and it is considering lowering its corporate tax rate, currently 11th.
Finland, the easternmost of the Nordics, may have also been selected by Google for its own location-related reason: its pool of highly skilled computer experts. With Facebook already working on its second data centre in Hamina, near Helsinki, it would appear that the economy that was once tied to the fortunes of Nokia, may have found a suitable, if more ephemeral, replacement in data.
But, while the Nordics, with their clean, sub-Arctic climate might be the hottest region for data centres right now, they would do well not to let it get to their head. Coming in tenth on the index was Qatar, and Singapore, Malaysia, Thailand and South Africa all finished in the top 20.
Which proves that sometimes being cool just isn’t enough.
Originally published by The Arctic Journal.
The Weekly Cover is The Rasmussen’s main story of the week. These articles will sometimes look ahead at one of the more important or interesting topics of the coming week, or they may provide insight and analysis about a current issue.
Get full-length articles delivered directly to your inbox. Subscribe to The Rasmussen’s newsletter.