Reykjavík Grapevine - 01.06.2007, Blaðsíða 5

08_REYKJAVÍK_GRAPEVINE_ISSUE 07_007_ARTICLE/ENVIRONMENT
Global Internet giants and computer cor-
porations such as Microsoft, Yahoo!, Cisco
and Google are showing a growing interest
in Iceland as a possible location for building
data centres (also known as server farms) that
would be powered by environmentally friendly
hydroelectric or geothermal energy. The com-
panies currently run dozens of data centres all
over the world, and now Iceland’s competitive
environment and cheap energy prices have
helped to make the country a feasible option.
At the same time, many locals see the service
companies as a new and more environmentally
friendly alternative to the aluminium industry
in the country.
Alexander Picchietti, Director of Business
Development and Global Services at the Ice-
landic telecommunication company Síminn,
regards this idea as a positive opportunity for
the country and its economy and is optimistic
that these talks will lead to something. “I
would be willing to bet a lot of money on
this becoming a reality. I think that it is in fact
inevitable. If you look at computing and the
migration to the web, that development will
not stop, and as it happens the world will be
an interconnected web of data centres, one
way or the other.”
Picchietti stresses how important it is to
fully understand what a data centre is, what it
means to establish such centres in Iceland and
what kind of service we are talking about. The
computer technology is constantly developing
and has changed immensely in the past few
decades and data centres are part of that
evolution. Data centres have been around for
quite a while, in fact, they have been around
much longer than the internet. Currently, the
data centres exist both for hosting data as well
as web services.
“As computing moves to the web, we have
these massive centres, which are established
for the purpose of housing equipment, con-
nected by fiber-optic cables. It’s a concentration
of lots of computer equipment to facilitate
this communication. That’s really what a data
centre is, a big building with whole bunch of
computers,” Picchietti explains.
Iceland is not the only country these giant
companies are eyeing as a feasible option
for their large computer buildings so I asked
how reasonable it is to expect them to choose
Iceland as the prime candidate.
“I wouldn’t say it’s reasonable to expect
them to come but I would say that it’s reason-
able to hope that they will come. In the light
of the big guys, [Google, Yahoo and Micro-
soft] it will be a long fight and there has to
be a lot of creative work done to get them to
say yes, but as the situation is today, Iceland
has an incredibly favourable atmosphere for
international business.”
Today, we have plenty of small data centres
in Iceland, for example at Anza, Skýrr and TM
Software Skyggnir. Picchietti says that what
now needs to be done is to take what we have
and make it a bit bigger. The only thing that
is stopping us, he adds, is a new submarine
cable for data transportation between Iceland
and Europe. At the moment, we have two
submarine cables, Cantat and Farice, but a
third one would be necessary for such large
companies as Microsoft, Google or Yahoo!
to even consider Iceland as a possibility. The
current cable condition is not consistent with
the advanced technology but plans have been
made for an additional submarine cable, which
hopefully will be realised by the end of next
year.
Being Socially Responsible
What these large companies find so inviting in
Iceland is the fact that the country is rich with
cheap environmentally friendly energy. Run-
ning data centres is a power intensive industry
and requires a massive amount of electricity,
something Iceland could easily provide. The
companies are also looking for a secure loca-
tion and the right infrastructure, with both
conditions fulfilled in Iceland. The country’s
location, being mid-way between Europe and
North America, is an added bonus.
In recent years, Iceland’s cheap energy has
mostly attracted aluminium giants who have
built, and have shown interest in building, nu-
merous more smelters around the country, but
which has caused a lot of discontent among
locals and environmentalists in the meantime.
Using the abundant energy sources to attract
Internet giants instead of aluminium companies
might be a new and more attractive option.
“Overall I think it’s a better use of our fine
natural resources, for sure” Picchietti says add-
ing that right now the country could deploy
several data centres without having to dam up
rivers and kill wildlife. He continues: “At the
same time I think everything is a balance and
Iceland’s infrastructure would not be like it is
today if it wasn’t for the aluminium factories.
[…] A lot of people like to talk about how
bad the aluminium companies are, but what
I find interesting is that you have a thriving
economy here in Iceland and a lot of that has
to do with the foreign investors that come in
through large organisations like the aluminium
companies. If you think about it in a global
perspective, it’s the most socially responsible
thing for them to do, to go where they are
using sustainable energy sources. To put things
into perspective, data centres are significantly
dependent on electricity and one of the rea-
sons that Internet companies would look at
coming to Iceland is because of sustainable
energy. It would be a globally responsible use
of resourses,” he says adding:
“The power infrastructure in Iceland, which
is really favourable for data centres, is so be-
cause of the aluminium smelters that have been
built here. Because of the aluminium smelters,
it is now possible to do other things. They
should therefore be looked at as an enabler
to now take the next step.”
Making Iceland Competitive
In May this year, representatives from Reykja-
vík Energy, an independent service company
owned by the City of Reykjavík, the town of
Akranes and the local authorities of Borgar-
byggð met with representatives from Yahoo!
to investigate the possibilities of building server
farms in Iceland.
Eiríkur Hjálmarsson, Chief Information Of-
ficer at Reykjavík Energy, told the Grapevine on
behalf of Reykjavík Energy that the discussion
started almost six years ago. The company
was examining the market for electricity and
economic innovations, and one part of that
investigation involved looking into the possibil-
ity of establishing data centres in Iceland.
“We informed certain companies about
this possibility at that time but when the cli-
mate change became a big issue last year
we noticed an increased interest in the idea.
Data centres require a lot of energy and the
claim for environmentally friendly energy is
important to the companies running them.
The geothermal power is a renewable source
of energy and a much better alternative than
burning coal or gas which produce green-
house gases” Hjálmarsson says adding that
discussions are still in their initial stage. Now
both parties are investigating how profitable
it would be to operate data centres in Iceland
and what would have to be done to make
that a reality, a new submarine cable being
an essential part of that process.
When asked if there have been talks of
possible locations, Hjálmarsson mentions the
lowlands of Borgarfjörður or Kjalarnes. Other
sites could be considered, all depending on the
conditions the companies find preferable.
When asked whether there have been any
negotiations about energy prices Hjálmarsson
says: “No, we haven’t talked about prices and
it really isn’t timely to talk about that part yet.
I think these companies are serious about
Iceland being a possibility but when anything
will be decided is hard to say. We are willing
to sell energy and examine the infrastructure,
but the next steps are up to the companies.
What we [at Reykjavík Energy] need to do now
is to be a feasible option for them.”
Halldór Jörgensson, the managing director
of Microsoft in Iceland, shares a similar view
and hopes that a new submarine cable will be
built sooner rather than later. After Microsoft
CEO Bill Gates met with Iceland’s President
Ólafur Ragnar Grímsson at a convention in
January, Microsoft in Iceland received an inquiry
from Bill Gates who wanted to investigate the
possibility of building a server farm in Iceland.
Jörgensson says that the discussions are still in
the initial stages though:
“This is a really exciting project but I don’t
want to be too optimistic. This hasn’t happened
yet. We are competing with other nations
where the governments have been more ac-
tive and participated in the process. We will
just have to hope that a new government
will show more interest in the idea and make
Iceland competitive. When this could become
a reality is hard to say. The next step for us
at Microsoft is to do field work and that has
already been organized,” said Jörgensson.
New Job Opportunities
At this time it is hard to make any predictions
as to a specific timeframe or what particular
company would locate in Iceland. At the same
time, it is hard to predict how large the data
centres could be or how many jobs they would
provide. Numbers ranging from a couple of
dozen up to 200 new jobs have been men-
tioned, but it will all depend on how advanced
the centre will be and how much interaction
the centre needs. But if one of these data
centres will pop up in Iceland it could mean
some positive changes for the economy. For
the high-tech industry, data centres would
mean more opportunities to employ local IT
people in the country. While the centres are
being built, construction workers could be
temporarily employed and after the centres
are ready the buildings will need attendants
and security.
As the current situation in Iceland is, we
don’t have all of the IT staff needed to service
the data centres, so the recruitment of foreign
IT talent would be inevitable.
“We would need some foreign employees.
We need this expertise which would be a good
addition to the Icelandic expertise and an op-
portunity to educate people in that industry
here in Iceland,” Jörgensson explains.
Current talks have focused on server farms
that would require approximately 50 to 70
megawatts of power which would be an im-
mensely large first step. Picchietti thinks we
need to be careful making assumptions regard-
ing numbers of employees or the size of the
data centres, as in the end it should depend
on what we want to do but not on what we
can do: “We can do a lot, even populate the
entire country just with these big buildings,
but do we want to? I don’t think so. There’s
1.5-2% unemployment in the country at the
moment so the question we should be focus-
ing on is what we need now. […] But I think
that the vested interests should be high for
everybody and we should work hard to make
it happen.”
As of today, nothing has been decided
but the discussions will continue in the forth-
coming months. Establishing data centres in
Iceland could be profitable for the economy
and change the employment opportunities in
the country as well as bring Iceland’s knowl-
edge industry to a new level. What remains
to be seen is whether these talks will lead to
action.
Iceland: A Hot Server Spot?
Text by Steinunn Jakobsdóttir Photo by Gulli
What these large compa-
nies find so inviting in
Iceland is the fact that
the country is rich with
cheap environmentally
friendly energy.
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