Microsoft, Google and VW pile in, so what's behind Norway's data center boom?

There's more to the rise in demand for Norwegian data centers than improved network latency.
Written by Stig Øyvann, Contributor

It's been a busy couple of years in the Norwegian data-center business. Before the end of this year, Microsoft will move into two new data centers of its own, near the Norwegian cities of Stavanger and Oslo.

On top of that, Google has bought a 481-acre property near the town of Skien on Norway's southern coast. Volkswagen Group moved into two specially designed HPC data halls in June at Green Mountain's Rjukan facility, in the center of southern Norway.

Since then, Green Mountain has announced that it's building a third facility, this time at Enebakk, not very far from Oslo. In September, colocation operator DigiPlex announced that it's starting to build two data centers at the same time.

SEE: Cloud v. data center decision (ZDNet special report) | Download the report as a PDF (TechRepublic)

One of DigiPlex's new buildings is on the company's Fetsund campus, north of Oslo. The other data center is not far from Green Mountain's new facility on a new location, Hobøl, which is east of the city of Oslo. Recently, DigiPlex listed the largest ever data-center bond on the Oslo Stock exchange, worth NOK1.8bn (€177.3m, $195m).

Green Mountain and DigiPlex say the increased demand for capacity that's driving growth comes from two sources. First, there are domestic customers moving from on-premise data centers out to colocation providers. Then there is international interest, mainly driven by cheap and green hydropower electricity, as well as Norway's climate, which pushes down the cost of cooling.

But another reason for increased demand comes from better regulation of the data-center market. In the past two years, the Norwegian government has adjusted taxation rules for the data-center industry, making electricity cheaper by taxing it using the same rules as power-intensive industries like ironworks. The government's changes to property tax rules have also helped data centers.

The reasoning behind these changes is a growing hydro-power surplus in Norway, so the government decided to use it to create value and jobs in the country.

In the same period, more international fiber connections between Norway and the continent have also come online. These developments add up to more business for Norwegian data centers, Green Mountain CEO Tor Kristian Gyland tells ZDNet.

"The datacenter strategy our government has presented over the past couple of years is important, with a dedicated effort for this industry," he said.

Gyland says demand for data-center facilities has increased, especially from overseas.

"We now see more than half of our business coming from international customers. The reasons for this is an increased focus on the environmental side, where we in Norway have green hydro power, and also the competitive situation in Europe, where the price for Norwegian electricity is the most competitive in Europe," he added.

SEE: Norway to public-sector suppliers: No e-invoice? No contract

Connectivity and communication speeds are important factors when companies decide where to site a data center. They used to be a challenge for the Norwegian providers, but they're not a problem anymore, according to Gyland.

"There's recently been a great expansion in fiber capacity in and out of Norway. What we regarded as a connectivity challenge five or six years ago is no longer an issue. It's not an obstacle for positioning oneself in Norway anymore," he emphasizes.

"If you have a data center where people are working interactively, then a rule of thumb is that 30 milliseconds latency is acceptable. With 30 milliseconds latency, we're almost reaching down to northern Spain."

Editorial standards