Data centers in Iceland? Yes, really!

Companies in search of stable, inexpensive energy to power their data needs are looking beyond the borders of their own countries these days. Those willing to look really far might consider harboring their strategic assets in Iceland.

Or such is the hope of Landsvirkjun, the national power company of Iceland.

Landsvirkjun executives joined an Icelandic contingent that traveled earlier this month to Boston and Cambridge, Mass., as part of a city-to-city exchange of ideas on energy innovation hosted by the MIT Media Lab and MIT’s City Science Initiative.

Iceland supporters made the case that the country’s year-round cool climate and abundant variety of low-cost, renewable energy sources make it an attractive site for data centers.

“Our power generation in Iceland is predominantly based on hydropower, but we are increasingly building out into geothermal turbines and now wind farms as well,” says  Bjorgvin Sigurdsson, EVP of business development at Landsvirkjun. “Because all of these options are renewable, Iceland is able to make long-term agreements at fixed prices. And we’re not influenced by the changes in commodity markets — oil or gas or coal — which gives our clients great visibility into the future.”

That value proposition made sense to Verne Global, a UK-based provider of offshore data centers that has partnered with Landsvirkjun to build a 45-acre state-of-the-art data center on a former NATO base just west of Reykjavik, an area protected from seismic activity.

“What we are allowed to do in Iceland is connect right into a power grid that’s the second most resilient in the world, and we can do that a very predictable cost — we’ve got [cost] protections out to 2030,” says Tate Cantrell, Verne Global CTO. “We can give [customers] a great deal of predictability for what that infrastructure is going to cost in Iceland. You can’t do that just anywhere the world.”

One client — BMW Group — has been able to cut electricity costs by some 80% by moving its high-performance computing applications to the Iceland facility, Cantrell says, noting that not only is the cost of energy inexpensive and stable, but that labor costs are competitive as well.

Verne Global is not the only company, nor Iceland the only country, to promote the idea of siting data centers in northern climes. Google has repurposed a paper mill into a data center in Finland; Microsoft maintains a data center in Amsterdam; and companies like Advania offer colocation services in Sweden and Iceland.

That said, Cantrell is particularly partial to the unique benefits of Iceland’s location. “It’s in the mid-Atlantic right between two of the biggest financial centers [New York and London] and also between two of the biggest data center infrastructures on the planet,” Cantrell points out. “People think about Iceland as remote, but in fact it’s quite strategic.”