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Iceland hopes to export energy via datacentres

Iceland is looking to attract foreign customers to datacentres on the island, as a way of exporting the energy it generates from its geothermal and hydroelectric resources
Written by Jack Clark, Contributor

Iceland has ambitions to become major provider of low-cost data storage, but its isolation could make this a tough sell to businesses.

The country hopes to foster a datacenter industry, so it can use its energy beyond the three aluminum refineries currently operating in the country, Ossur Skarpheoinsson, Iceland's minister of foreign affairs, said on Thursday.

"In the future, [datacentres] will be one of the major ways to export green energy beyond the borders of Iceland," Skarpheoinsson told ZDNet UK. "My vision is that during this century we will move away from this basic production of aluminum smelters that are important to our economy and use [the energy] for a green economy."

Iceland gets the overwhelming majority of its energy from geothermal and hydroelectric sources, Skarpheoinsson said. These are environmentally friendly, but unlike natural gas or petroleum, are difficult to package up and export. Some utility companies are working on high-voltage undersea powercables to deliver the power to Europe, but it will be years before this happens, ZDNet UK understands.

At the moment the Iceland has two datacentres: Thor, a 28,000-square foot facility that opened in mid-2010 that consumes around 3.5MW of power, and the Verne Global datacentre, which officially opened on Thursday and has leased a campus that gives it access to over 100MW of datacentre power, sourced from renewable hydroelectric and geothermal sources.

While Verne Global is starting out with a single Colt modular datacenter using 1.5MW of power, it is confident it will eventually meet or exceed the 100MW available.

What sets Iceland apart from other countries is the combination of its excess power capacity, and how its utility companies are prepared to price their electricity: Verne Global has a power agreement with Icelandic utility company Landsvirkjun that gives it predicable prices for the next 20 years — a deal that is hard to find in any other European country, according to the datacentre provider's chief technology officer, Tate Cantrell.

In the next 10 years, Landsvirkjun hopes to supply one percent of Europe's datacentre power needs — around 160MW — to facilities in Iceland, its chief executive Hordur Arnarson said. 

Location concerns

However, some businesses prefer to have their data stored close to their location, so Iceland's distance could be a stumbling block.

"The subtle disadvantage it has is... putting a datacentre in a place you don't know so well is one thing. It's another thing putting it somewhere where you don't have a local business address," said Steve Wallage, managing director of Broadgroup Consulting.

On the other hand, Wallage noted that in Iceland "power availability isn't an issue, whereas in the UK you're concerned about power station decommissioning."

Landsvirkjun said 10MW could be provisioned to most sites within Iceland inside a year of being requested, compared with the average within Europe of one-and-a-half years to three years.

Verne Global, whose customers include Iceland-based infrastructure service GreenQloud and Eve Online developer CCP, acknowledged the difficulty of convincing businesses to send their data further afield.

"Every opportunity has some components of it that are hard work," Cantrell said. "You take the cost benefit, plus 'green' [energy], and you throw in the ability to expand and power security for 20 years. That starts to be enough to get over any obstacles they might have."

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