Energy-rich Iceland eyes the high tech data centre market
Published 08/09/2015 | 02:30
As it emerges from financial isolation, Iceland is trying to make a name for itself again, this time in the business of data centres - warehouses that consume enormous amounts of energy to store the information of 3.2 billion internet users.
Iceland has yet to attract heavy hitters like Apple, Google or Facebook, each of which has either an existing or planned data centre in Ireland.
But cheap and plentiful power and a long associated with high-tech trends such as the 'Eve' video game, the genome deCode project and data sharing site Wikileaks means the island sees itself as a potentially important data host.
It wants to capitalise on what is a rapidly growing data storage business: data creation has accelerated with 90pc of stored data created in the two previous year, according to Scandinavian research group Sintef, and data centres consume 2pc of global electricity to keep servers cool.
Iceland's massive energy generating capacity from hydro and geothermal power cannot be exported due to the island's remoteness so it produces five times more electricity than its 320,000-strong population needs and all of it is renewable.
It is hoping its cool climate and cheap reliable power can entice data centre operators, offering them dramatically lower costs and a recently passed tax incentive.
Although the country has not yet attracted big Silicon Valley names, smaller data operations have already arrived. Iceland has five data centres, including one at a dismantled NATO base operated by Verne Global, whose top publicly named client is carmaker BMW, and the government is campaigning to attract more.
"When BMW said they paid 83pc less for operating their data centre on Iceland than in Germany, it (interest) really picked up," said Einar Hansen Tomasson, who works to woo data clients through a government-backed programme, Invest in Iceland.
These days, anything anyone does on a computer generates reams of data, or to be precise 5 quintillion - add 18 zeros - bytes globally per day with little stored on a PC or laptop.
But the storage of someone's emails from 2003 requires a very different service than retrieving NASA's processing of New Horizons's data from near Pluto some 4.7bn miles away.
Processing on this scale is called high performance computing, the most power-hungry kind.
It is this kind of data storage that Iceland is best suited for, analysts said.
"It's a big problem for a lot of commercial customers and some universities who run high performance computer environments in Europe because the advanced computers are becoming so big and so energy hungry," said Giorgio Nebuloni of US firm International Data Corporation.
Iceland's drawbacks include remoteness that makes it ill-suited to things like high frequency trading.
In June the Icelandic parliament agreed to offer investors in the country a range of incentives that include a profit tax cut to 15pc from 20pc, a 50pc real estate tax relief and to let companies depreciate assets completely.
Iceland's strict data privacy laws, that were seen as off- putting by industry, may also bolster Iceland's attractiveness following high profile leaks such as the Ashley Madison case, as end customers worry more about how information is stored and protected.