Iceland Data Center Market

Iceland is promoting itself as the best place for data centers and what makes Iceland perfect are its climate, geographical proximity and the availability of energy resources. Recently Verne Global has opened a large data center powered by renewable resources and Iceland government hopes similar facilities will follow. Verne Global opened its data centre in Iceland in October 2011. The investment in the first phase of the data centre is estimated at around ISK 20 bn., and the total investment for this project is estimated at ISK 80 bn. articulated in four phases. Iceland placement between Europe and the U.S. means that companies in the U.S. can run their Web services for both continents in one location, potentially saving money. Iceland has abundant hydropower and geothermal power (100% clean power); it can offer data center services for the same price or less than Web services powered by fossil fuel-based grids in other locations. Gartner estimates that data centers account for around 0.5% of all global carbon emissions. The electricity cost in Iceland is about four cents per kilowatt hour, and customers can get 20-year fixed price contracts. The U.S. average is about 10 cents per kilowatt hour.

The data center industry has been and will continue to be highly dependent on power, both to power the servers and cool the environment. The greatest expense data centers face is power and most of that is used to chill the racks of servers. Worldwide, data center energy use increased 56% from 2005 to 2010, according to a report from Stanford's Jonathan Koomey, which was commissioned by The New York Times.  Maximum safe operating temperature for data center equipment is 81 degrees Fahrenheit (27 degrees Celsius). The latest high-density circuits, one rack of computer servers (19 inches wide and about six feet tall) can emit as much heat as multiple kitchen ovens. Without massive air conditioning to remove the heat, the servers will happily cook themselves to death. And power for those air conditioners is not free. In Iceland the highest temperature ever recorded in Iceland is 79 degrees Fahrenheit (26 degrees Celsius). The average daily high in July in Iceland's capital of Reykjavík is a non-sweltering 56 degrees Fahrenheit (13 degrees Celsius). Air conditioning in Iceland is a matter of just opening the windows.

Iceland remote and secure location is an attractive option for data centers specializing in disaster recovery back-up. Its mid-Atlantic location makes Iceland an ideal base for companies with business in both North America and Europe. Iceland is currently connected to neighboring Greenland, Scotland and Denmark through submarine lines that then connect to larger markets in Europe and North America. The three undersea cables offer a total throughput of eight trillion bits (or about 37 Blu-Ray discs worth of data) per second to both Europe and North America. A fourth is due to come on-stream in 2012 and, it is claimed, will have the lowest latency across the Atlantic. It's a 2,734-mile cable system that Iceland IT players have described as game-changing. The new cable system called the Emerald Express is set to link Iceland to the United States, Canada, Ireland, the United Kingdom and mainland Europe.

Natural calamities like volcano eruptions and earthquakes are the disadvantages. Iceland sits atop an active volcanic rift and In 2008 Iceland was hit by an earthquake measuring 6.1 on the Richter scale. Volcano and earthquake activity is well-mapped, and data centers and power plants are located strategically with those risks in mind. But data center operators can build their data centers with these concerns in mind and part of the data center design and operations include mitigating any environmental impacts to protect the data center campus. Another disadvantage is IT talent pool in Iceland is not that large, and it is not easy to shift existing data center personnel to Iceland. Existing employees may not be interested to move there and this might increase cost for the data center operators as they have to install Remote Infrastructure Management Technologies. Iceland is still recovering from the Global Financial crisis three years ago as it is one of the biggest causalities of the crisis and financing is still a problem in the country. Infrastructure for the supply chain is also a cause of concern in Iceland.

With renewable energy and clean energy factors becoming significant factors for internet, eCommerce and other technology companies Iceland may become a crucial location for their data center strategy. Customers of these companies want to use the services that are environmentally conscious. Iceland government is also supporting the data centers market with the necessary policy support and infrastructure support. Low power costs, cool climate and low cost of infrastructure like land & buildings are the attractions for the data centers to locate to Iceland. But Iceland is facing stiff competition from Scotland lately as it had some success attracting data centers, touting cold air and green electricity derived from wind and water power.