The Nordic countries of which Denmark, Sweden, Norway, Finland and Iceland constitute the regional group, have for decades shown Europe and the world how to do things differently. João Marques Lima takes a closer look at how the Nordic data centre market is emerging as a leader.

With a high “human capital”, infrastructure and national/regional stability, it comes to no surprise the region has attracted many of the data centre giants including Facebook, Google, AWS, Microsoft, Apple, Equinix, Digital Realty and others.

Although, the region is now entering a new phase of development. We have seen some of the strongest regional-based players emerge here – such as the case of Digiplex – and now we are witnessing a second wave of “local” investment and new business comers.

This is the Nordics’ next page in the widespread data centre economy built in Northern Europe.

According to international consulting group COWI, the Nordic data centre construction market could attract annual investment in the order of EUR 2–4.3 bn. by 2025 with the power capacity in data centre additions ranging between 280–580 MW annually.

The Nordics have for long been a magnet for digital infrastructure investment. Interestingly, the region has also not been targeted by just a single vertical of the data centre sector, but all of them, including hyperscale, colocation, enterprise and built for purpose cloud facilities.

Some of the largest investments have come from the hyperscalers, especially AWS, Google, Facebook and Apple. Russian search engine Yandex is also a stronghold in the market with Chinese companies also being heavily present, including Baidu, Tencent, Xiaomi and Huawei.

Norway’s DigiPlex is the largest player founded in the region and has built one of the largest footprints of branded data centres in Europe in the Nordics alone. Verne Global, Advania, Green Mountain, Bulk Infrastructure, Lefdal Mine, Hetzner, DC Finland, Ficolo, Hydro66, are all just examples of more Nordic-born hosting businesses.

We can then add in intercontinental players such as Equinix, Interxion (a Digital Realty company), Etix Everywhere (acquired by Vantage Data Centers in early 2020), and the Nordic hosting monopoly becomes a vast pool of operators and resources.

However, we are now noticing a new wave of investment, this time driven by private equity. For example, Hyperco was recently launched to serve the region’s rapidly expanding data centre economy. Backed by Danish real estate investment company NREP and pension fund Varma, and founded by former NREP shareholders Ville Vartiainen, Aleksi Taipale and Timo Pohjanpalo, who has been named CEO, the company plans to invest €200 million (US$243.5 million) in both new and existing data centres initially in Finland and later in the wider Nordics region. In total, Hyperco says it is looking at investing over $1 billion in building infrastructure across the region.

Taipale says: “The region’s cool climate combined with a reliable electricity grid and the availability of renewable energy provides the best foundation to develop sustainable data centres and our digital society.

“Modern data centres, which consume huge amounts of electricity, should run on renewable energy and the waste heat generated in data centres should be recovered.”

Energy & Infrastructure

The sector worldwide is going through a growing trend of procurement of renewable energy to power facilities. Yet, few places offer as much – readily available – green power as the Nordics. This is not only enabling hosting businesses to go green, but it also enables a faster time-to-market business model.

Reliable power supplies with no outages are a must for data centre buildings. Being power one – if not the most – costly part of a facility’s OPEX; lower prices are also preferred by operators. The Nordics score high on both propositions.

According to the Council of European Energy Regulators (CEER), for the period 2002–2016, the average annual planned and unplanned outage times in the Nordic region were rarer in the range of 20–150 minutes, when compared to 30–168 in the FLAP-D region – Europe’s largest data centre markets made of Frankfurt, London, Amsterdam, Paris and Dublin.

All Nordic countries are big on renewable energy production as well. Hydropower, geothermal power, biomass and wind, are just some of the methodologies used to keep carbon footprints low.

In a time when scrutiny is growing over data centre operators to reduce their carbon footprint, this has made the Nordics an attractive destination for deployments.

Additionally, the region’s naturally-cooled environment allows for the use of more energy friendly and cost-effective power and cooling solutions, such as adiabatic cooling.

The Nordic region is also a hub for talent and human resources. Start-up hubs in Stockholm, Oslo and Helsinki are driving a lot of the innovation around digital societies – something the Nordic populations have embraced over the years.

However, the Nordics vertical diversity can be seen in areas such as blockchain, cryptocurrency, quantum computing and other “novel” technology movements. Some of the most important mining facilities are in fact located in this region.

With this drive to innovate and lead market trends, the Nordics have also built a robust critical infrastructure network that links it to other regions and markets.

According to Huawei’s 2020 Global Connectivity Index (which does not include Iceland), all Nordic countries are in the rank’s top 10 with Sweden, Denmark and Finland ranking 4th, 5th and 6th respectively and Norway appearing in 10th place. The US, Singapore and Switzerland ranked the highest in order of placement from first to third.

Home to several subsea cables including Havfrue, Skagerrak-4, Tampnet Carrier, to name but a few, the region is in the process of laying even more routes to expand its reach. Some of the new cables under construction or planned include NO-UK Cable System, Havsil, Celtic-Norse and Leif Erikson.

Another cable that is projected is the Artic Connect, a potential investment of $1.2 billion, proposed to link Europe and Asia through a submarine communication cable on the seabed along the Northern Sea Route (NSR). However, the project is currently suspended.

The Case for Data Centre Construction in the Nordics

The case for data centre construction in the Nordics is, as seen, not hard to make. Strong energy production and reliability, human capital, a vivid investment landscape, a varied enterprise layer and supporting infrastructure make this a location of opportunity for operators and investors.

Lastly, it is important to consider the regulatory and policy aspect, which comes to no surprise, is quite supportive of the development of facilities. Over the last five years, governments across the region have launched schemes to speed up building approvals as well as create the right frameworks for investors in addition to lowering energy costs to some of the lowest in the world.

Afterall, in many countries today, data centres – especially hyperscale – represent the largest foreign investments in a given country. And the Nordics have learnt that earlier than most.