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Iceland’s competitive advantages as a global Data Centre location

An independent study reveals that Iceland is well positioned to become an international datacenter hub. The study results show unique advantageous clean energy reserves, competitive power prices and solid infrastructure that make Iceland a highly attractive location for datacentres. The study was conducted by BroadGroup Consulting and published by Landsvirkjun, Iceland's national power company.

BroadGroup, which has advised many global companies on data centre location and analyzed the competing
attractions of many countries, undertook an independent analysis of Iceland as a global data centre hub, comparing it using a wide variety of criteria with today’s leading data centre locations from around the world. 

In the report the criteria is divided into ‘basic’ and ‘differentiating’ factors. The basic requirements include power, connectivity, safe climate, reliability, accessibility and business /legal environment factors. Future power availability is in important factor as well as natural disaster risk, including the impact of climate change. 

For differentiating factors, including the ongoing operational costs, power pricing is very important, as it can contribute up to 40% of annual operating expenditure.

The results of BroadGroup’s analysis show that Iceland is a highly attractive place to locate a data centre:

On the key issue of power, encompassing everything from costs to quality to regulation, Iceland scores more highly than leading global data centre locations such as the US, UK, Sweden, Singapore and Hong Kong. Iceland power costs can be halve those in Scandinavia, and significantly more competitive than other European countries. Iceland’s power costs remain very likely to stay much lower than other countries, particularly given the opportunity to cap such prices for ten years or even longer for greenfield projects.

Power reliability and quality are extremely high. Iceland has a long history with a key group of power-intensive users already – the aluminium smelters. Such users, including global leaders such as Rio Tinto and Alcoa, can have requirements of >400MW and have expanded their sites in Iceland due to the strong reliability and availability. These are users for whom an outage of more than an hour would cause serious damage, and have selected Iceland and expanded in Iceland due to its power reliability. For these businesses, there have no disruptions due to natural disasters since the first smelter started operating in Iceland in over 40 years ago.

Power is 100% green. Iceland is one of few countries in Western Europe with large quantities of competitively priced, renewable carbon neutral electricity. Setting Iceland apart from most countries, it produces electricity using exclusively hydropower, geothermal energy and onshore wind. These are sustainable, environmentally “green” resources with zero carbon trade-offs. This makes it an ideal location for addressing corporate responsibility considerations. 

On telecoms, existing connectivity, Greenland Connect, FARICE and DANICE are being substantially upgraded, while significant new capacity is planned to be added over the next several years, enabling up to 30 Tbit/s of full capacity.

The full report, Iceland’s competitive advantages as a global Data Centre location, can be downloaded from Landsvirkjun website.

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For further information on the benefits of establishing a business in Iceland please feel free to contact us.

Incentives

Iceland focuses on a favorable business environment, including low corporate tax, availability of land and green energy at competitive prices and efficiency within European legislative framework. New direct investment projects can apply for an investment agreement, ensuring generous regional incentives, including a corporate tax rate ceiling of only 15%.

Why Iceland

Along with having one of the lowest corporate tax rate in Europe, Iceland has a highly educated workforce which is ranked among the highest in the world, offers competitively priced renewable energy with an advanced infrastructure making Iceland an ideal location for investors