As demand for data centres skyrockets, particularly driven by AI advancements, companies are on the hunt for locations that offer fast, sustainable, and cost-effective options for building new facilities. In this race, the Nordic region is emerging as a leader, with its powerful energy infrastructure and progressive policies making it a top contender for data centre development.
Microsoft, a leader in the tech world, has already made a shift in how it selects locations for its expanding data centre footprint. Alistair Spears, the senior director for Datacentre & AI Infrastructure at Microsoft, recently highlighted that the company’s new focus is on locations that offer reliable, emission-free power. As AI workloads surge, power efficiency is no longer just a consideration; it’s a determining factor in site selection.
Power-First Strategy: Why the Nordics Lead
The “power-first” approach, which puts energy availability at the forefront of decision-making, has made the Nordic countries an attractive choice. Countries like Finland, Norway, and Sweden boast energy grids that are not only stable but also predominantly powered by renewable sources. Finland, for instance, generates over 90% of its electricity from carbon-neutral sources, including hydro, nuclear, and biomass. This makes the region an ideal fit for companies looking to meet sustainability goals while ensuring uninterrupted power supply.
The UK, in comparison, faces challenges with grid constraints, particularly in the South East, where new hyperscale projects can face delays of years due to power shortages. In this context, the Nordic approach to energy infrastructure provides a critical advantage.
Renewable Energy and Grid Interconnectivity
The Nordic region’s reliance on hydropower, alongside investments in nuclear and biomass, has helped them build an energy mix that’s over 90% renewable. This stable and cheap energy source is vital for data centres that need to run 24/7, consuming enormous amounts of electricity.
What sets the Nordics apart is their long-term investment in cross-border interconnectors. These infrastructure projects, such as NordLink between Norway and Germany, and the North Sea Link between the UK and Norway, allow for flexible power distribution. This grid connectivity not only increases capacity but also helps balance energy supply and demand across the region.
Streamlined Process: Speed and Scale in Data Centre Development
The Nordic countries have not only focused on creating a reliable energy supply but have also streamlined the entire process of data centre development. Countries like Finland and Sweden have made significant regulatory reforms, simplifying planning approvals, incentivising green energy usage, and offering tax breaks for data centre projects. Finland, for example, has fast-tracked permitting for strategic data centre infrastructure, while Sweden has created green industrial parks with pre-approved land and grid connections.
This approach stands in stark contrast to the UK, where large data centre projects can be delayed by up to five years due to slow regulatory processes or power access bottlenecks.
Key Takeaways for the UK
The UK has the potential to be a competitive player in the global data centre landscape, but it will need to address several challenges in order to do so. Here’s how the UK can learn from the Nordic model:
- Prioritise Grid Investment Based on Future Demand: The UK must plan its energy infrastructure ahead of time to prevent bottlenecks. Like the Nordics, the UK should consider over-provisioning grid capacity to avoid future delays, especially in areas that are primed for hyperscale data centre growth.
- Align Energy and Digital Infrastructure Policy: In the UK, energy and digital infrastructure have historically been planned in isolation. By treating data centres as a national strategic asset, the UK could boost investment and speed up development. Integrating energy strategy with digital infrastructure planning will be key to making the UK an attractive location for data centre growth.
- Expand Interconnectors and Develop Regional Hubs: While the UK is starting to invest in interconnectors, such as the North Sea Link, more can be done to create regional data centre hubs in areas like Scotland or Wales. This would relieve the pressure on the already oversaturated South East and take advantage of the renewable energy resources in other parts of the country.
- Incorporate Circular Economy Principles in Data Centre Builds: The UK could benefit from incentivising data centres to use energy more efficiently, such as through heat recapture systems. This would not only align with net-zero goals but also make data centre projects more acceptable to local communities.
- Adopt a “Power First” Site Selection Philosophy: The UK should encourage data centre developers to choose sites based on power availability rather than proximity to population centres. This would ensure that data centre expansion is aligned with sustainable energy sources and can meet the growing demand for AI infrastructure.
Looking Ahead: Will the Nordics Remain a Leader?
The Nordic region has established itself as a key player in the global data centre market by aligning energy availability, infrastructure, and sustainability. However, as the demand for AI-scale infrastructure continues to grow, other countries are watching closely and could eventually catch up.
To maintain its competitive edge, the Nordic model must be continually refined, with a focus on sustainability, efficient energy use, and cutting-edge infrastructure development. For the UK, it’s not too late to learn from these strategies. By planning ahead, treating digital infrastructure as a national priority, and aligning energy and data centre policies, the UK can become a formidable player in the global data centre race.
