Asian tech firms to put data centres near the Arctic Circle

Asian technology companies are set to follow Google and Facebook in putting data centres near the Arctic Circle to benefit from the lowest power prices in Europe, according to utility Vattenfall.

Internet services from China, Korea, Malaysia, Thailand and Indonesia will probably be next to take advantage of an expected record electricity glut in the Nordic region, Oskar Almen, vice president for business development at Sweden’s largest power producer, said by phone from Stockholm.

Google opened a data centre in Hamina, Finland, in 2011, while Facebook started its first overseas server in Luleaa, Sweden, last year.

Streaming services for movies, pictures and data are set to double global demand for server halls, requiring more than 500 terawatt-hours of power by 2025, or almost as much as Germany’s annual demand, according to Vattenfall.

Energy use in Southeast Asia alone is expected to increase 80 per cent by 2035, International Energy Agency data show.

“Local versions of YouTube, Google and Facebook exist in almost all Asian countries where English is not the major language,” Mr Almen said.

“With large populations and a strained power situation, these players will start to look for solutions in other places.”

Companies in need of more capacity are looking toward Nordic countries, attracted by a stable power grid as well as the chilly climate to keep equipment cool.

With plans for more nuclear and wind generation, the region’s electricity surplus is expected to reach an unprecedented 50 terawatt-hours in 2025, or 13 per cent of annual demand, according to Markedskraft, an analysis firm based in Arendal, Norway.

Yandex, Russia’s largest search engine, will open a data centre 60 kilometres from Helsinki this year, according to the Invest in Finland, a government agency that assists foreign investors.

Vattenfall expects Asian companies to present similar plans within the next three to five years.

“Yandex will have a data center in Finland, and it is only a matter of time when Asian companies will follow and set up shop in the Nordics,” Jukka Manner, a professor in networking technology at Aalto University in Finland, said by e-mail yesterday.

“I would be surprised if we didn’t see something happening by the end of the current decade.”

Facebook plans to build a total of three server buildings in Luleaa, while Google is investing €450 million in two installations since taking over an old Stora Enso Oyj paper mill in Finland in 2009.

Microsoft said i it will invest €250 million in a new Finnish data centre.

Bloomberg