Iceland Bets on Green Data Centers

It’s always interesting to see a project you’ve been tracking for some time come to fruition. I’ve been following Verne Global, and its plans for a data center campus in Iceland, for almost two years, so it was rewarding to see its progress first-hand at the official launch event last month.

The Verne Global data center is based on a former NATO facility west of Reykjavik, near Keflavik International Airport. Iceland’s advantages as a staging post between North America and Europe are important, but it’s the availability of a dual-sourced renewable energy supply that makes the project unique. Iceland’s electricity is provided 100 percent by hydropower and geothermal energy. In addition, Iceland’s temperate climate enables year round free air cooling without the need for chillers, helping the site to operate at a power usage effectiveness (PUE, a measure of how efficiently a data center uses energy) of around 1.2.

The data center’s location provides strong green credentials, but it also offers important commercial advantages. Iceland’s renewable energy resources mean a stable and cheap source of electricity for data center operators and other businesses. Landsvirkjun, the local utility, is able to offer up to 20-year terms for electricity rates and has, for example, been offering a public rate of $43 per megawatt for 12 years. This allows Verne Global to claim that the total TCO for its customers could be 60 percent lower than a similar deployment in London.

The choice of location has been combined with an innovative approach to data center development through a close partnership with Colt. I’ve written previously about Colt’s approach to modular data center design, and the Keflavik data center is its first public showcase, though it has since announced another data center customer in UK luxury car maker Jaguar Land Rover. The partnership with Verne Global also involves Colt installing a new point-of-presence (POP) for its Pan-European communications network within the facility. Having had a chance to see the actual data center and talk to Colt’s engineering and management team, I understand more clearly how far its offering differs from containerized approaches to modular design.

“Pre-fabricated data centers” is perhaps a better term for what Colt is doing, building the components at its factory in the north of England and shipping them for rapid installation on-site. Colt’s approach is also modular in that it supports an incremental build-out of the data center in 500 square-meter units, which is also helping Verne Global manage its capital investment.

Another key stakeholder in this venture is the Icelandic government. During the launch, the local mayor and an Icelandic government minister gave speeches that showed their clear enthusiasm for the project. Iceland is keen to exploit its natural advantages to develop a large-scale data center industry and has been clearing away regulatory and tax issues that might hamper expansion of the sector.

 Iceland, of course, was one of the countries most badly hit by the banking crisis and it is now betting on data centers as a more stable basis for the future growth. The availability of the new Emerald Express Trans-Atlantic Cable System, a 5,200 km ultra-high bandwidth link between the United States, Canada, the United Kingdom and Iceland, planned for late 2012, will help Iceland and Verne Global better target U.S. data center business.

Today, Iceland’s energy surplus supports a power-hungry aluminum smelting industry. The government hopes that in future, processing bits may be equally important to the island’s economy.