According to market research company Arizton's latest research report, the Nordic data center construction market will grow at a CAGR of 7.33% during 2022-2028.
In Europe, the Nordics region is preferable for data center development by some major hyperscale and colocation operators, according to the report. Hyperscale operators such as Google, Microsoft, Apple, Meta, Oracle, among others, opted to open their self-built cloud regions to support the high demand from regional and local customers. In cloud adoption, public and hybrid cloud environments are witnessing strong growth. The local enterprise has significantly adopted cloud-based services, IoT services, and big data analytics, which have boosted the local colocation demand in the market. The Nordics data center market received investments from local colocation operators such as atNorth, AQ Compute, and Hetzner Online. Government entities in Nordic countries are moving toward digitalization and are constructing data centers to support their digital transformation goals.
Key insights
– Denmark has topped the list amongst Nordic countries, investing more than USD 500 million in 2022. Sweden and Norway followed Denmark in terms of high investments in 2022.
– Operators are signing PPA with renewable energy providers to increase sustainability by decreasing their carbon footprint. For instance, Telia and Telenor signed a PPA with Better Energy for a solar park construction in Denmark.
– There is increased growth in cloud regions set up by multiple hyperscale data center operators, such as Google, Microsoft, AWS, Oracle, and Meta.
– There is an increase in initiatives being taken by various governments across the regions to make the respective countries carbon-neutral in the future. Operators are moving through more sustainable construction methods like wood and mycelium.
– Supply chain disruptions, increasing inflation rates, shortage of skilled workforce, and political disturbances in Russia will likely hurt the market.
Carbon-neutral goals
In the Nordics, renewable energy sources such as wind, geothermal, and hydro are abundant. Operators are aligning their goals with the carbon-neutral goals of the respective countries. For instance, Green Mountain, a colocation operator, uses 100% of renewable energy in its data center operations. Denmark is setting up energy islands to harness the resources in the Baltics and will be the first in the world. They will have the capacity to not only supply Denmark but also supply neighboring countries. Also, Nordic Governments are releasing policies relating to sustainability and energy reuse. For instance, the Swedish Government released energy policies such as the Electricity Certificate System to ensure energy is used through renewable energy sources such as solar, wind, hydro, or geothermal. Various countries are providing tax incentives for investors based locally or even globally, which will aid in constructing data centers. The Government of Denmark launched a Green Tax Reform and green R&D, which falls under the Danish Recovery and Resilience Plan, for which a USD 250 million investment is planned. Further, Norway has an abundance of hydropower supply; therefore, the government provides favorable and flexible tax rates on the consumed electricity to the industries which are energy intensive.
Investments Overview
– Danish digital competitiveness ranked 4th among 64 countries in 2022, according to the IMD World Digital Competitiveness Ranking. The Danish Information and Communications Technology (ICT) industry is valued at around $35 billion. It is highly developed and focuses mainly on software services and development.
– The Digital Growth Strategy, 2025 of Denmark aims to contribute toward the digital transformation of the whole country. This is done by collaborating with sectors and industries such as social partners and trading associations.
– Copenhagen is a major destination for data center development as it hosts major ICT companies and has a strong start-up ecosystem.
– Sweden is one of the industrially advanced countries in the Nordics. The data centers being developed currently are well aligned with long-term sustainability goals. Sweden is very favorable for data center development due to low taxes on green investments and low power costs. The country stands at the forefront of excellence in technology, stability, and sustainability driving immense data center investments.
– Stockholm is a major contributor to data center investments as more than half of the internet traffic of the Nordics flows through it. It is one of the largest markets for colocation in the Nordics, having more than 125 network providers and a population of 350 million in the vicinity of its data centers.
