22nd August CBRE published it's 2021-Q2 market view with special attention for Norway. From the report: "Norway is a data centre market that has been gaining more attention lately due to the country’s positioning as a renewable energy production hub. Like other Nordic locations, Norway’s government has recognised the potential of data centres to fill a gap left as other energy-intensive industries wind down – from mining to forestry and paper mills".
The report continues: "Now, as hyperscalers and other customers explore regions beyond FLAP, the government’s efforts are starting to pay off with the Norwegian leased data centre market being set to grow by nearly 100MW by 2024, taking total market supply to more than 200MW for both retail and wholesale colocation.
The surge in new supply is linked closely to demand, with Norway currently having a vacancy rate of 24%. Enterprise and cloud customers are finding Norway’s business environment makes it easy to deploy, and low-cost energy brings about efficiencies as well as enables companies to meet sustainability targets that are becoming increasingly important in today’s climate-change-conscious world.
Norway is part of the European Economic Area which provides it access to the European Union single market but is not part of the constitution which brings some ease in doing business. Increasing M&A activity is also driving market interest (recent acquisitions include Lefdal Mine, now owned 75% by Columbia Threadneedle, DigiPlex, now owned 100% by IPI, and Green Mountain, now owned 100% by Azrieli).
The Norwegian leased data centre market saw 36MW of take-up in the last two years, and we suspect the majority of this can be attributed to international business. Companies taking data centre supply include Microsoft which has deployed an availability zone (AZ) to serve the Nordics. Many other hyperscalers are showing continued interest in the market, however, are yet to deploy regions or zones.
The market is currently being driven by larger deals that can benefit from deploying data centre environments at scale with lower costs. The wholesale colocation market accounts for 83% of take-up this year and CBRE expects it will reach above 90% in 2024.
The Norwegian data centre market is considered a gateway to sustainability and Environmental, Social & Governance (ESG) targets. Many traditional enterprise customers have deployed their less latency or securitysensitive operations to Norway, especially those environments that require high density supply, such as artificial intelligence (AI) or high performance compute (HPC) functions.
Norway’s mostly hydro-powered electricity grid has been designed to cater for large electricity demand across the country and the wider Nordic region. Norway benefits from being able to resell excess electricity through its brokerage platform Nord Pool, where day-ahead pricing is offered to local electricity providers to purchase. This is despite the large consumption within country from energy intensive industries such as data centres, mining and engineering. The grid is more than capable of sustaining continuous reliable energy in a sustainable way.
Norway’s fibre connectivity is not as robust. As a result, the country has a reliance on partnerships with private sector organisations to upgrade the network. This can be seen with the recent infrastructure upgrade by BULK Infrastructure, where new HAVFRUE subsea fibre connectivity has been delivered to Norway.
Data center developments are primarily focussed around Oslo, however, there have been some deployments in the western region of Stavanger and Måløy. These sites serve cloud and HPC among other deployments, offer good subsea connectivity and have access to cheaper power.