High in the mountains of central Norway, snowmelt drains from white peaks and accumulates in Lake Stormyrbassenget. The icy lake water spills into a ravine and spins turbines at the Nedre Røssåga power plant, churning out zero-emissions electricity for around 100,000 households.
This hydropower plant, one of several hundred throughout Norway and the broader Nordic region, which also includes Sweden, Denmark, Finland and Iceland, helps ensure that the Nordics have not only some of the cheapest electricity in the world but also the greenest. Some three-quarters of Sweden’s electricity comes from zero-carbon sources, and an astounding 98% of Norway’s.
That’s a big reason why tech companies are increasingly turning to the Nordics to build the power-guzzling data centers that house the world’s rapidly growing masses of selfies, Facebook posts, pet videos, Google Docs and emails.
The Covid-19 pandemic has turbocharged companies’ green ambitions even as it has also required them to scale up their online infrastructure to cater to dramatically higher Internet use as people stay home. Few places look as good to accomplish both of those at once as cool and snowy northern Europe. Nor does it hurt that the region’s brisk weather minimizes the costs of cooling down all the heat-spewing hardware this requires.
“There is a lot of demand and construction” of data centers going on there, said Byrne Murphy, the founder and chairman of DigiPlex Data Centers, which builds and operates some of the data centers in the Nordics in which big IT companies keep their reams of data. “The pandemic accelerated demand from a few years into one. And we expect it to continue for the foreseeable future.”
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Demand was strong even before the pandemic. In 2018, the Nordic Council of Ministers, the region’s main body for intergovernmental cooperation, estimated that the Nordics could attract annual investment of €2-4.3 billion for the construction of data centers by 2025.
The world’s big tech companies began heavily increasing their footprint in the region in the 2010s. Facebook now has data storage centers in Lulea in northern Sweden and completed another in Denmark in September 2019. Google has centers in Hamina, Finland, and Fredericia, Denmark, and opened another in the Netherlands (technically just outside the region) this month. Amazon’s AMZN AWS launched a data center in Stockholm in 2018.
Nordic governments have taken steps to encourage firms to build data storage centers there. For example, data centers often enjoy better tax rates than other, traditional industries. (Similar kinds of enterprises, such as Bitcoin miners, typically won’t qualify for such perks.)
They can probably count on steady demand for years to come. Average data generation per capita was forecast in 2018 to increase to 72 gigabytes in 2025, compared with the then-current per capita rate of just four gigabytes, according to the Nordic Council of Ministers. And that was before the pandemic goosed demand for data and green power.
It wouldn’t be feasible for most companies, especially if they do a large share of their business outside Europe, to house most of their data in the Nordics. Data that needs to travel rapidly back and forth between your computer, cell phone, or other device — for example, if you are sitting in an autonomous vehicle that must process huge amounts of data every fraction of a second — has to be stored relatively nearby. If it’s too far away, latency begins to creep higher.
This is why many of the largest cloud providers have data centers around the U.S., including in places such as Virginia, Washington state, Oregon and Georgia. And they are building more. “What you’re seeing is big cloud companies like Microsoft MSFT , Amazon, Oracle ORCL and Google GOOG are doing this massive expansion across the globe in top markets,” said Andy Cvengros, a senior vice president at JLL JLL , a real estate services company based in Chicago.
A large proportion of data, however, does not need to be quickly available to users at low latency rates. From a company’s point of view it makes sense to stash this kind of data as inexpensively as feasible, even if far away, since the hardware will still consume abundant amounts of power.
For example, many photos taken today are accessed only once and a large share of those are never deleted. Yet their digital blueprints must still be stored inside a data center, waiting for the moment — perhaps years away — when someone digs through their phone’s archives to take a peek.