As Norway’s political parties campaigned for their parliamentary seats in Oslo, the government launched one of Europe’s most detailed roadmaps – Norwegian data centres – sustainable, digital powerhouses – to attract and boost data centre investments across the country.
As the results came in and landed a victory to Labour’s Jonas Gahr Støre, behind the scenes at the Storting, otherwise known as “the great assembly”, paragraph after paragraph a picture was being painted with the aim of supporting the sector and grow the sector’s workforce ten times fold.
Minister of Regional Development and Digitalisation Linda Hofstad Helleland, says: “Norway has a unique foundation for becoming the world’s most attractive data centre nation. We have a surplus of renewable energy, low electricity prices, good digital infrastructure and a cool climate.
“The Government is now strengthening its commitment to a sustainable data centre industry. This will create many new jobs in the regions and help develop new digital services throughout the country.”
The Ministry of Local Government and Modernisation has commissioned an economic impact analysis of potential and completed data centres in Norway. In it, it reports that since 2012, private developers have invested more than NOK 80 billion in digital infrastructure in the form of mobile and broadband networks. In addition, the data centre industry has invested considerable amounts in data centres in Norway, to the tune of NOK 2.7 billion in 2019 and 2020 alone.
The economic impact analysis estimates that in 2019, the data centre activity in Norway represented a turnover of approximately NOK 1.6 billion and directly employed nearly 300 people. In 2019, the data centres accounted for a total of 2376 jobs in Norway. Most jobs that data centres create are associated with the construction of premises and installation of servers.
Looking ahead, in one of the scenarios described in the analysis, which assumes an annual capacity growth of approximately 25% – well in line with industry growth rates, especially in the Nordic region-, the data centre industry could potentially employ a total of 11,100 persons in 2025 and 24 900 in 2030. In this scenario, these are made up of approximately 9,700 employees in colocation data centres, 3,000 in hyperscale data centres and 12,200 in edge data centres.
In the same scenario, the industry could contribute as much as NOK 14 billion to GDP in 2025, primarily on the basis of colocation data centres. Furthermore, the industry could represent NOK 30.9 billion of GDP in 2030, divided into approximately NOK 12.7 billion from colocation, NOK 3.9 billion from hyperscale and NOK 14.3 billion from edge data centres.
“Norway shall be a pioneering country in the development of a sustainable and circular economy that makes better use of its resources,” adds Helleland.
“There is a large potential to increase the use of waste heat from data centres in the future, and we have already seen good examples of how Norwegian data centres can support value creation in other industries. Enabling efficient use of waste heat from the data centres will help us achieve the goal of a sustainable and data-driven economy that makes use of regional competence and creates jobs for the labour market of the future.”
The Norwegian data centre industry consists of six large companies and a handful of smaller operators, including DigiPlex (the largest Norway-born colocation brand recently acquired by IPI Partners), Green Mountain (acquired for $850 million last July by Israeli real estate developer Azrieli Group), Basefarm, Lefdal Mine, Bulk Infrastructure, Statkraft and Ringerikskraft.
The six largest companies account for approximately 70% of the capacity and have an average installed capacity of 16 MW.
The smaller companies have an average capacity of approximately 1 MW. One of the smallest facilities in the overview is Terrahost, with 0.25 MW, while Green Mountain in Stavanger is one of the largest, with 15 MW.
According to the economic impact analysis, the Norwegian data centre industry represents an established capacity of approximately 105 MW. A recent estimate by the Norwegian Water Resources and Energy Directorate (NVE) shows a larger total installed effect of 174 MW, but the estimate indicates that only 99 MW of this capacity is being used.
Further solidifying these stats, is the latest forecast by CBRE Data Centre Solutions Consulting, which estates that the Norwegian leased data centre market is set to add up 100MW, taking market supply to 216MW for both retail and wholesale colocation by 2024.
On a revenue front, the Implement Consulting Group reports that since 2015 Norwegian data centres have seen average annual growth of 19% in sales revenues, for example faster than the growth in capacity. This is because “most data centres still have a lot of unused capacity and are thereby able to generate more sales revenues”.
In order to continue supporting and achieving all of the above, the government has set out several actions that it will take. These include:
- Strengthen the marketing of Norway as a data centre location
- Strengthen Invest in Norway, including with a view to better facilitating investment in data-based value creation and data centres in Norway.
- Continue its dialogue with Norwegian industry and leading international technology companies to obtain input on the work to facilitate investment in data-based value creation and data centres in Norway.
- Increase competitiveness
- Produce a guide in English (website) with relevant information on how to establish a data centre in Norway.
- Ensure continued stable framework conditions for the data centre industry.
- Consider how processes related to the expansion and licensing of the transmission network can be streamlined. The Government has appointed a public commission to consider this and other issues.
- Continue the efforts to develop ICT competence in Norway.
- The Government will make provisions for the actors in the data centre industry to sign partnership agreements with educational institutions.
- Facilitate sustainable development
- Establish a national heat map to ensure better utilisation of waste heat.
- Help facilitate sustainable development of the data centre industry in Norway – including by introducing requirements for waste heat in data centres.
- Participate actively in the European cooperation to develop appropriate, and primarily pan-European, solutions that ensure digital security, combat crime and protect national security interests associated with data centre activities.
- Assess data centres with a view to regulate within the scope of the Electronic Communication Regulations and other appurtenant regulations to ensure digital security and protect national security interests.
- Reinforce the digital foundation
- Undertake thorough risk and vulnerability analyses in at least five new, vulnerable regions, and phase in new measures after annual reviews.
- Continue to facilitate commercial expansion of networks that connect Norway to other countries.
- Continue state grants to broadband expansion in rural areas.
- Continue to take a long-term perspective of state investment in fibre infrastructure, help ensure that more capacity is built into the system than initially needed, and ensure that provisions are made for market-based leasing of capacity on open and transparent terms.
The government’s plan includes several millions of Dollars that will be used to fund the initiatives outlined above.
Launched last June, the Norwegian Data Center Industry (NDCI) association marked the start of a new phase for the country’s market expansion.
Petter M. Tømmeraas, senior vice president data centre Services at Basefarm and chairman of the board of NDCI, says: “We are lucky to have a government with a clear strategy to support our industry and look forward to the continued cooperation with the government and other public entities.”
Norway might have taken a few years to come to the limelight, but 2021 has certainly been a game-changer year and the government listened to the industry. Home to two of Europe’s largest acquisitions this year, a healthy roadmap for expansion and robust sustainable energy backbone, Norway’s data centre future is bright and will aid in cementing the Nordics as one of the leading hosting geographies in the world.