Norway powers up a clean data centre future for CIOs

Norway and its neighbours are at the forefront of making the data centre environmentally sustainable.

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It has become a common element of business and technology vernacular that data is the new oil. For Norway, a country that was at the forefront of the North Sea oil boom of the last century, data centres are replacing oil as an economic powerhouse. So, should organisations consider Norway as the next home for their data centre procurement choices?

At the beginning of the last century, Norway was not considered a wealthy European nation, but it would end the century with one of the highest incomes per capita in the world. North Sea oil and gas accounted for 51% of the nation’s exports. The proceeds of the oil boom were not wasted; successive Norwegian governments invested in infrastructure programmes to provide Norway with high-quality energy and transport systems, backed by a strong educational ethos. As Norway reduces its economic reliance on oil in the 2020s, the humble data centre is at the heart of a new, environmentally sustainable agenda. In the Nordics region (Norway, Denmark and Sweden), PA Consulting says over 200 data centres have been built, and the digital leaders of our age have all backed the Nordics, with Facebook, Google and Microsoft all setting up shop in the region. 

In a post-pandemic economy where consumers and many business leaders have no appetite to go back to the old and outdated methods of 2019, there is an awareness of the need to tackle climate change. Dubbed the dirty secret of technology by data centre insiders, reducing the environmental impact of the data centre is now rising up the strategic agenda, which is why Norway and its neighbours are in a strong position to clean up.

“Ultimately, expectations from customers, regulators and the public at large will only become more pressing as the effects of climate change become more pronounced,” says Daniel Bizo, senior research analyst with 451 Research in the report Multi-tenant Datacenters and Sustainability, which was commissioned by Schneider Electric, a leading supplier to the data centre industry. “As global data centre infrastructure grows in response to higher demand for digital services, so does interest in its considerable environmental impact,” says Bizo. The report adds that vendors and cloud service providers have an opportunity to lower the impact of technology on the environment. As energy consumption is both the biggest expense of a data centre and, therefore highest environmental impact, Norway, with 98% of its energy coming from renewable sources, is, therefore, well-positioned to be a clean home for a data centre. 

“Sustainability has been brought up the agenda by clients; there is a change happening,” says Harald Riise, CEO of Compute Nordic, a mountainside data centre in Norway that uses 100% hydroelectric power. Riise says organisations are drawn to Norway not only for its plentiful clean energy but also for the abundance of global network connectors. As a data centre operator, Riise says financial services and scientific organisations are early movers to Norway.

Nick Ewing, Managing Director of EfficiencyIT, an independent data centre design and build specialist, believes Norway will continue to attract environmentally-conscious businesses and interest from sectors who need to counteract their core business activities; the automotive and oil industry may, for example, choose to take up Nordic data centre hosting. With their core business having a highly negative impact on the environment, data centres powered by green and geothermal energy can provide opportunities to reduce some elements of their impact on the planet, with a benefit of lower operating costs.

Riise expects the number of data centres in Norway to increase, both because of the government encouragement but also significant interest from the investment community. “Norway has cheap power and cheap land, so there is an influx of capital available and some really big infrastructure players getting involved.” With financial markets depressed following the decade of austerity followed by a pandemic, investors are desperate to find a decent return on investment.

The Norwegian business case

Norway’s position as a member of the European Economic Area (EEA), which puts the country in regulatory alignment with the European Union, but not a member of the 26-state political group, is also beneficial, as CIOs gain sustainability but are also reassured that their data is being managed in accordance with laws such as GDPR. “Norway is in a fortunate position where our cost base is low, and we have credibility,” Riise says. With nearshoring bases such as Estonia, Latvia and Lithuania close by and a growing number of CIOs tapping into the talent bases of the former Soviet states, Norway’s data centre sector is expected to gain a boost.

Norway investing in data centres is part of a wave of clean, digital innovation sweeping across countries that see sustainability and digital as the opportunity for their nations. All three Nordic countries have been putting considerable effort into their data centre industries. EfficiencyIT cites EcoDataCenter in Sweden, which takes heat from its data centre to provide energy for the local community, atNorth in Iceland and Bulk Infrastructure, also in Norway. “Norway’s energy grid is known for its resilience. The BulkInfrastructure N01 Campus is located next to Europe’s largest renewable energy substation, with 12 independent feeds,” Ewing says.

In Europe, the Middle East and Africa, in 2020, data centre demand grew by 11%, according to Knight Frank, a commercial property business. South Korea and a number of African economies are not being left out of the opportunity either.

“It is particularly exciting to see new smaller data centre hubs emerging in response to increased user demand for new technologies and services, whilst shrewd investors seek opportunities to acquire and develop in both traditional and these challenger markets,” says Ben Stirk, Partner and Co-Head of Global Data Centres at Knight Frank.

According to 451 Research, data centre operators must factor in the negative impact of climate change on their own operations: “Traditionally, datacenter designers have looked at historical weather data for temperature and humidity peaks when specifying power and cooling equipment, but now they may need to take into account the likelihood of new extremes in the future, including not just temperature but the higher risk for grid outages and droughts in heat waves. For existing sites, severe weather events and increased flood risks are also high on the list, and mitigation can prove costly,” Bizo at 451 Research says.

Europe and the European Union will play an important role in the move towards sustainable data centres. Because demand for data centres in Europe is forecast to grow significantly, the European Union has set out a broad agenda of sustainability measures as part of its post-pandemic economic recovery plan, and the European Green Deal initiative of 2019 aims to make the world’s largest trading bloc carbon-neutral by 2050, with data centres reaching a climate neutral status by 2030. Riise at Compute Nordic believes demand and policy in Europe will drive innovation, and he sees the data centre industry in Norway becoming part of a wider ecosystem of connected sustainable business, from home heating, hydrogen production and even indoor salmon farms.

CIO and CTO considerations

Recent investor action at major banks and in the boardrooms of oil firms like Exxon demonstrate that CIOs and CTOs need to take sustainability seriously, and will be tasked by their CEOs to reduce the impact technology and the overall business has on the environment.

Ewing at EfficiencyIT says Nordic data centres do provide CIOs with the ability to reduce scope 3 emissions (all other indirect emissions that occur in a company’s value chain: Source the Carbon Trust) and that data centre operations in Norway will help reduce costs too.

“It’s not just about selecting an operator; it’s about knowing that I’m deploying my critical applications in the right facility,” Ewing says. “Resilience and uptime are paramount; how can I be sure that I’m protecting my mission-critical assets, and what steps do I need to take to ensure uptime?” He says that depending on the main location of the organisation, its size, scale and its global reach, many CIOs and CTOs may therefore need dual sites, and the Nordics could become secondary, or one of many locations. Finally, Ewing adds that although a data centre in Norway may have a reduced carbon impact, if staff need to visit the site regularly, then flying across to Norway is far from environmental best practice - especially if reducing emissions is a primary driver of the business case. Automation of the data centre is likely to help; however, data centre automation is not developing at the pace of data centre demand and accessibility may still remain an issue.

Future relationships

All three of the Nordic nations have invested in the data centre sector, and where other groups of nations would descend into rivalry, Riise of Compute Nordic reveals a collaborative nature to the Nordics that will benefit CIOs and CTOs. “The Nordic Council is our own EU, and we have had free movement of people and good trade opportunities,” adding that if one nation succeeds, they bring the other members of the Nordic Council along with them.

“Norway and the UK have a seamless relationship,” Riise says of a trade deal signed between the two nations, as well as Iceland and Liechtenstein, in June 2021. The deal includes the specific provision of digital businesses. Riise adds that the two have a long history of close trading and that the UK has always been one of Norway’s largest trade partners.

Norway’s oil industry heritage means there is a wealth of engineering skills available, and the investment in education has provided the country with a strong foundation of artificial intelligence (AI) and machine learning (ML) talent. With near-zero downtime and sustainable energy, the Nordics are well placed to be the ethical choice for Blockchain, a notoriously power-hungry technology. 

Data is not only the new oil; sustainable data centres are set to retain Norway’s place as a powerhouse.