Nordic Lure For Data Center Investors

The surge in interest among global tech players is buoyed by the launch of national artificial intelligence strategies across the Nordic region.

Nordic data centers

Scandinavia is fast becoming a desirable hub for data center operators. Tech giants Microsoft, Google, Meta, DigiPlex and Green Mountain are expanding their regional data center operations to benefit from generous tax breaks, ample supplies of relatively cheap renewable energy and a well-developed system of interconnectors to key Mainland European markets.

In June, Microsoft completed a $13 million land purchase in Vihti, Finland, to build a new data center connecting to the company’s Finnish data centers in Espoo and Kirkkonummi.

Research by Sweden’s Department of Energy, Business and Industry (EBI) underlines the unrelenting growth in data center space. The EBI estimates that the Nordic data center construction market could increase from just over $1.6 billion in 2022 to $2.6 billion in 2028.

The surge in interest among global tech players is buoyed by the launch of national artificial intelligence (AI) strategies across the Nordic region, said Ebba Busch, Sweden’s EBI Minister. “Sweden is developing a cost-attractive environment to bolster growth in the construction and operation of data centers, and there is mounting competition for new projects among the neighboring Nordic states.”

The government initiatives are focused on implementing AI in specific sectors that generate significant data sets and drive the need for new data center construction. Google, Microsoft, and Meta want to strengthen their presence in the hyperscale data center domain through private and public partnerships with Sweden, Norway, Finland and Denmark that would help Nordic countries become carbon neutral.

Norway uses tax breaks to lure international capital to build new data centers. Recent sharp growth in capital investments within this space can be traced to the Norwegian government’s June 2020 decision to reintroduce tax relief for cryptocurrency mining that puts electrical power’s cost on par with relief allocated to conventional data centers. The restored tax breaks on electrical power supplies have lifted investments by local and foreign companies.

In practical terms, restoring the Norwegian tax break reduces the electricity charge for crypto miners from $0.016 to $0.00047 per kilowatt hour. All data centers can claim the tax relief with an annual power consumption of 0.5 Megawatts and above.