Data Centers in Norway – Rapid Expansion and Core Benefits

With its cold climate, easily accessible renewables, competitive electricity prices, and active government support, Norway – ranked as the most resilient country in the world – is increasingly seen as a favorable location for international data center projects.

In Europe, Norway has fundamental advantages in terms of data center investment opportunities and is attracting global interest. One example is the acquisition by Azrieli Group of Green Mountain Data Centers, where DLA Piper assisted Azrieli Group. Market players expect the Norwegian data center industry to expand rapidly over the next few years, and new opportunities are already emerging in the market.

introduction

As mentioned in our 2015 Real Estate Gazette article “High-tech real estate – the future looks bright for data centers in Norway”, Norway has very favorable climatic conditions for the cooling of the environment. , abundant clean energy resources, a good electrical network and fiber infrastructure, available land and a skilled workforce in both real estate and IT. In 2015, however, Norway’s fiscal stance on energy consumption was a barrier for large-scale data center operations compared to neighboring jurisdictions such as Sweden, Denmark and Finland.

Since 2015, the legal, political and economic framework for data center activity in Norway has evolved in a positive direction for both developers and potential investors. As we approach the end of 2021, Norway is in a position to capture a disproportionate share of future growth in hyperscale cloud facilities, high performance computing and enterprise data centers.

Low total cost of ownership

One of the main fundamental benefits of investing in Norwegian data center projects today is the low total cost of ownership. Compared to other European markets, rental costs, land availability, cooling costs and the cost of powering racks in Norwegian data centers are considered to be very competitive.

With its hydropower supply, Norway has a long tradition of granting favorable tax rates on energy consumption to energy intensive industries. Aluminum production was an early example. Data centers were not included in the tax regime with lower tax rates for some energy-intensive industries in its early days. But since 2017, data centers in Norway have been considered an energy-intensive industry for tax purposes, which means favorable tax rates now apply to the power consumption of data centers. This change has put Norway at the forefront when it comes to total cost of ownership, with some of Europe’s lowest energy prices on data center power consumption.

Norway generally offers good energy use efficiency (PUE) within its data centers. PUE is a metric used to determine the energy efficiency of a data center. It is calculated by dividing the total amount of energy entering a data center to be used for cooling and supporting the facility as a whole, by the amount of energy used by the IT equipment itself. same, the ideal number being as close as possible to 1.0. .

One of the main reasons for Norway’s good PUE scores is Norway’s cool climate, which allows for superior efficiency due to the automatic and free cooling of the environment. The high number of days with low temperatures allows for better PUE than sites in warmer climates. Data centers in Norway also use cold seawater from neighboring fjords for cooling.

Green and renewable energy

Norwegian electricity production comes almost exclusively from green and renewable sources, and mainly from hydropower. Hydropower is considered the cheapest source of renewable energy and accounts for around 90% of Norwegian electricity production. Norwegian production of renewable energy already exceeds consumption and Norway has long been a net exporter of renewable energy. In 2020, 98% of electricity consumption in Norway came from renewable energy sources, the highest rate in Europe.

Market leaders in the data center community focus on the origin of power and environmental, social and corporate (ESG) governance in general. Norway is consistently ranked among the most sustainable countries in the world in terms of ESG compliance. With its easy access to green and renewable energy in an increasingly environmentally conscious market, Norway has a competitive advantage.

And after?

In 2018, the Norwegian government launched the strategic document “Norway as a Data Center Nation”. The strategy paper included suggestions such as a favorable property tax on sites, additional funding to further strengthen fiber optic connectivity to other countries, a new simplified legal framework for digging fiber optic cables on sites. public land and additional funding for higher education in the IT sector.

The 2018 strategy document was considered a success and the Norwegian government has since launched a new strategy to invite international parties to establish data centers in Norway. Suggestions from the recently released strategy include strengthening Norway’s marketing as a data center location, focusing on how Norway can help overseas companies establish themselves with data centers, increasing sustainability with requirements for the use of excess / waste heat, creating a national heat map for better use of excess / waste heat, increasing development and permitting efficiency, and increased cooperation between industry and educational institutions.

Anyone looking for opportunities in the data center market in Europe can look forward to expected strong growth and rapid expansion over the next few years if they look to Norway. Norway is well positioned to capture new European demand for data center capacity, and any development will be fueled by profitability and accessible, green and renewable energy.

More Stories
Argentinian import upsets the unlucky Arklow