Q&A with Invest in Denmark: The Nordics May Be the Answer for Many Data Center Opportunities
COPENHAGEN — Invest in Denmark is the official investment promotion agency of the Ministry of Foreign Affairs of Denmark. Invest in Denmark provides tailor-made solutions for foreign companies looking to set up or expand business or research activities in Denmark – free of charge and in full confidentiality. Jens Oerum is working as an Investment Manager at Invest in Denmark. Oerum is based in New York City, and is assisting North American companies in establishing their businesses in Denmark. Kim Schultz is working as a Special Advisor at Invest in Denmark. Schultz is based in the city of Odense in Denmark, and is focusing on assisting data center companies in establishing their businesses in Denmark. In this Q&A, we connected with Oerum & Schultz to explore why the Nordics region, specifically Denmark, is poised to fill many niches in Europe’s data center arena.
CapRE: Thanks for chatting with us today. We always enjoy learning about the latest in the Nordics. We hear you’ve been keeping very busy with hyperscalers activity.
Schultz: Yes. For example if we take Facebook, seven or eight years ago they had their first data center up in the northern part of Sweden. And since then they have moved to Denmark, which is closer to central Europe. They’re now building a 53,000 square meter data center right in the middle of Denmark in a city called Odense. Recently, they confirmed that they are considering a second large-scale site near the city Esbjerg at the Danish west coast. This year three new subsea fiber optic cables will land near Esbjerg.
CapRE: Ah and those cables are a whole other story!
Schultz: Indeed. We already have a cable to New Jersey and now there will be one more. There will also be a cable from the UK with a direct link to Dublin and one to the Netherlands, providing low latency access to Amsterdam. So it seems to be quite an attractive spot for for data center operators – on the West Coast of Denmark.
Google has also acquired two large scale sites in Denmark. They’ve started construction on the first site just a couple of months ago. The second site is next to the southern Apple site, near the Denmark-Germany border. Many things have been going on there for the last couple of years.
CapRE: It does seem like an avalanche, or at least a snowball, in that time period!
Schultz: It was only back in 2015 that Apple acquired their first hyperscale site in Denmark. Now, in Sweden, you’ve seen that Google has acquired land and AWS has started construction of three data centers in Sweden. Google also has a site in Finland. Microsoft has announced that they are going to build a couple of data centers in Norway.
CapRE: The Nordics seem to be very hot.
Schultz: A lot of things are happening in the hyperscale arena in the Nordics. The hyperscalers saw the light a couple of years ago, that power in central Europe might become an issue – prices were increasing – and it would be difficult to acquire very big sites simply because of a lack of land, construction permits, and very high prices. So all of the indicators point to the Nordic countries.
CapRE: What about colocation?
Oerum: The colocation industry seems to run into the same kind of issues. Things seems to get tight in Frankfurt, London, Amsterdam, Paris and Dublin. If you can’t really expand, and some of those companies need to grow 10-15% per year in terms of capacity – that’s a problem. Most of the companies have started looking at the Nordic countries. Until recently, the word was that these companies had to be close to their customers, but now a lot of them are saying that they need to be close to where the energy is available. And if they can find that combination, of energy that’s available at an affordable price AND located closely to central Europe, that would be great.
And in terms of the Nordics, Denmark has the southernmost border closest to the rest of Europe. That means we’re getting a lot of attention. And we have a lot of space. In terms of area, it’s approximately the same size as the Netherlands. It’s not a big country, but we only have 1/3 of the population of the Netherlands. So we’re 6 million people, and that means we have a lot of space available at affordable prices. Furthermore, the World Bank has ranked Denmark as the easiest country in Europe to do business for nine years in a row, which for example can be exemplified by the fact that we are the fastest country for issuing building permits in Europe.
CapRE: What kind of power mix does Denmark offer?
Oerum: Our power is very, very green. Most of it is renewable. If you plug in in Denmark, you will by default have 72% renewable energy and that’s increasing year by year. We have a lot of wind power and biomass. By 2030, the plan of the government is that all electricity in Denmark should be renewable. That’s also quite attractive to the data center industry as sustainability is becoming a highly relevant metric for the datacenter industry. At the same time, it is essential that the growth in the data center space is accompanied by energy efficiency innovation and new models where investors are engaged in expanding the supply of renewable energy.
Oerum: Plus we have another possibility – to use waste heat for data centers. And that’s something that most data centers haven’t really used. Most of our houses in Denmark are heated by district heating. It means you can take the heat from data centers, upgrade it to about 70 degrees Celsius, and then use it for district heating. And in the wintertime, that can heat houses, as well as hot water year-round. That’s a very sustainable solution we can offer.
It’s not something you can make a lot of profit from, and the viability depends on a series of factors, but it’s a great story to tell – that you are making use of your energy twice. The use of heat is quite new to the business and a lot of operators don’t even think about it until we mention it to them. Given the right conditions, it’s something that we expect to see more of in the years to come. And actually, the Facebook data center will heat 7000 homes in Odense.
CapRE: So what’s next? Where will Northern Europe go from here?
Oerum: The Nordic Council financed an independent report recently and found quite a few interesting figures about the growth so far and the growth potential. The data center construction market in Nordic is expected to grow by 2 to 4.3 Billion Euros annually by 2025 – that’s 280–580 MW per year over that period. And we expect to take a major share of it in Denmark.
CapRE: Wow. Thanks again for chatting with us. We look forward to seeing you at a future CapRE Data Center Summit soon!