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The Emerging Dominance of Data Centers in the Baltic Region [Feature Article]

The digital revolution has made data the new gold, and the custodians of this precious resource are data centers. The Baltic region, comprising Estonia, Latvia, and Lithuania, is experiencing a significant surge in data center developments, positioning it as a strategic hub connecting North, East, and West. 

Data centers are the physical manifestations of our digital societies, housing the enormous amounts of data generated and consumed daily. They are pivotal to our modern lifestyle and economic activities, underpinning everything from e-commerce to e-governance.

Considered the gold mines of the digital era, data centers store, process, and distribute data, ensuring seamless digital experiences. They also play a crucial role in global digital transformation initiatives, fostering competitiveness, and attracting foreign companies to offer their services in the host markets.

The Baltic region has in recent times gained traction as a prominent data center market. The region hosts over twenty data center providers across approximately 50 facilities. While relatively smaller compared to their Nordic counterparts, these facilities are seeing significant investments and expansions.

Estonia’s MCF Data Centre, for example, is on track to become the region’s largest facility, with a total planned capacity of 31.5 MW and spanning 14,500 square meters. This trend reflects a broader growth trajectory, with the Baltic States predicted to see a 58% revenue growth from mid-2021 to mid-2025.

High energy efficiency is a common thread among the new data center developments in the Baltics. These facilities aim to achieve 25% higher energy efficiency than the market average, aligning with global trends towards greener data centers.

For instance, Greenergy’s top-tier data center in Estonia is designed to maximize energy efficiency. Similarly, Telia’s data center in Lithuania leverages renewable energy sources, demonstrating the industry’s commitment to sustainability.

The rapid digitalization triggered by the COVID-19 pandemic has significantly influenced the Baltic data center market expansion. As businesses and public sector organizations increasingly rely on IT services, the demand for robust and secure data centers has naturally skyrocketed.

Estonia, a pioneer in digital governance, has particularly benefited from this trend. As a country where almost everything can be done online, Estonia’s data center infrastructure is crucial to its ‘e-country’ ambitions.

The Baltic region’s strategic location and infrastructure make it an attractive destination for data center investments. Countries like Lithuania and Latvia offer ample land availability, access to power, and government support, making them ideal for large-scale data center projects.

The region’s connectivity is another critical factor. Estonia, for example, is connected by multiple sub-sea cable systems and domestic fiber networks, ensuring reliable and high-speed data transmission. This connectivity is expected to attract more investors and clients from across Eastern Europe.

Government support plays a key role in facilitating data center CAPEX. Actors like the Estonian Investment Agency provide resources and assistance to foreign investors, ensuring a smooth market entry. The government’s commitment to digital transformation and tech-friendly legislation further encourages data center developments.

Moreover, the Three Seas Initiative Investment Fund, a forum of twelve EU states geared towards regional dialogue, has provided funding for several data center projects in the region. This fund underscores the importance of regional collaboration in advancing the digital economy.

Robust DI deployments for years to come

The Baltic data center landscape is set for continued growth, driven by digital transformation, sustainability initiatives, and strategic location as aforementioned. The region’s commitment to energy efficiency, robust infrastructure, and government support is expected to attract more investments and solidify its position as a leading data center hub.

Telia Lietuva’s data center in Lithuania exemplifies this future. The facility will be the largest in the country, featuring state-of-the-art technology, renewable energy sources, and modular design for future expansions. This project, worth €10 million, represents the region’s ambition and the future of its data center market.

Other key players are driving the Baltic data center market such as Estonian company Greenergy Data Centres which has invested nearly €40 million in a high-energy efficiency data center. Meanwhile, Telia Lietuva has purchased a 2-hectare land plot near Vilnius for a future data center, which will form the largest data center infrastructure in the Baltic States upon completion.

In addition to these homegrown players, global data center giants like Equinix and Digital Realty have also made significant investments in the region. This mix of local and international players contributes to the dynamic and competitive nature of the Baltic data center market.

With its strategic location, robust infrastructure, and commitment to digital transformation and sustainability, the Baltics present an attractive proposition for data center investments.

As digitalization continues to shape economies worldwide, the role of data centers will only grow in importance. For the Baltics, this trend represents an opportunity to cement its position as a leading data center hub, driving economic growth and innovation for years to come.

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