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Iceland provides northern lights for Europe’s digital neighbourhood

As the price of energy has rocketed, IT companies running power-hungry services and datacentres are feeling the heat. It's why Iceland believes its subsea networks and growing datacentre industry offer advantages

Joe O’Halloran
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Published: 18 Dec 2023

In November 2023, people in the southerly latitudes of the UK and Ireland were treated to something very uncommon: a sight of the aurora borealis. To those living further north, in Iceland, for example, the celestial sight is far from uncommon. And in the world of IT and communications, Iceland also boasts some rather uncommon advantages through nature, namely the power of geothermal energy that is leading to a massively cost-effective datacentre and networking industry based in a location that stands essentially in the digital neighbourhood of British and Irish enterprises, and which offers some unique advantages in terms of technology offers.

Iceland boasts some unique characteristics. Around its rugged shorelines are to be found 350,000 whales, inland exist 170 geothermal pools, and it contains Dettifoss, Europe’s most power waterfall. There are geysers aplenty: in fact, the word in English comes from the Icelandic. In all, 99% of electricity produced in Iceland is from renewable sources, and this gives its service providers a massive advantage: almost fixed energy costs.

This ace in the hole comes into play massively when looking at the datacentre industry. The main challenges facing firms fall mainly into the brackets of speed, sustainability and reliability. Specifically, that is generally providing the speed of computer performance that would be acceptable in the emerging digital world, while maintaining uptime and meeting net-zero objectives to satisfy market demands.

In most countries, the largest – if not the biggest – operating cost is related to power consumption, with extra headload from cooling. As almost every business (and home) knows only too well, power consumption costs have spiked over the recent past, rising especially sharply in reaction to global political events such as the war in Ukraine. Iceland is virtually immune to these dynamics and its datacentre industry is able to make deals based on constant energy costs.

Sustainability is now very much a thing of C-level attention. A recent article in the Harvard business review noted that 99% of large company CEOs agreed with the proposition that sustainability was important for business success. The Energy and Climate Intelligence unit believes there is a need for action given that in its estimation, 49% of world annual GDP is covered by jurisdictions legislating for net-zero emissions while MIT Sloan Management research pointed to similar expectations by investors showing 755 of them regard sustainable performance as being important when making decisions.

As it stated its datacentre strategy at the recent Datacentre Forum in Reykjavik, opened up by no less a presence than the country’s president, Guðni Thorlacius Jóhannesson, leading global specialist in energy management and automation Schneider Electric pointed out that for the past 15 years, datacentres have been largely focused on electrical efficiency. Going forward, it would implement a plan based on a philosophy of comprehensive datacentre sustainability based on five key drivers – namely: to set a bold actionable strategy; implement efficient datacentre designs; drive efficiency in operations; buy renewable energy; and decarbonise supply chains.

Yet it warned there were generally three key pitfalls in the industry while setting up such plans. These comprised a lack of corporate strategy, misalignment of internal expertise and a lack of business cases. Circular design had to be prioritised, whereby the datacentre of the future had more interaction with the grid and greater power variability with IT, based on more complex cooling architectures. All of this in a world where it was very likely firms would have more sites to manage with same the complement of staff or even fewer than at present.

Digital backbone

These messages have been taken on board by the leaders in Iceland’s datacentre industry. At Datacentre Forum, the country’s leaders in the industry highlighted the potentials and possibilities of Iceland’s digital infrastructure and how it will allow the country and the Nordic region in general to become the sustainable digital backbone of Europe.

And before the low-cost, energy-efficient datacentres can do their magic, the digital backbone of the country is essential, and the key to how the country can digitally locate itself tens of degrees of latitude further south.

Datacentre provider Borealis Data Center revealed stats showing that its network – based on four submarine cables that bridged continents – supported connectivity with a latency as low as 12ms to a landing point in Galway in the Republic of Ireland, with similar connections to a site in the north of Scotland. From these links were short hops to financial centres in Dublin and London and the rest of the two countries. Fellow provider atNorth quoted latency round-trip times of 18ms to Frankfurt; 18.4ms to London; 17.3ms to Amsterdam; 20ms to Paris; 15ms to Copenhagen; and 15.4ms to Oslo.

With such connectivity established, Borealis outlined to the conference a number of key challenges in its mission, principally meeting the goals of the EU Green Deal and climate neutrality by 2050. It was aiming for a 55% reduction in greenhouse gas emissions by 2030; increase use in renewable energy; and a general improvement in energy efficiency. In terms of power efficiency, the company was quoting 100% renewable sources with a power usage effectiveness (PUE) of 1.03, with 0.38g of CO2-e/kWh electric carbon intensity.

From a computation standpoint, Borealis assured that its infrastructure was optimised to handle high-performance computing (HPC) and high-density workloads (such as AI) with demanding energy and cooling requirements for computer-intensive applications. Overall, it said it can offer clients a secure, reliable and cost-efficient site that fulfils future needs in terms of sustainability and scalability.

One such client is IBM Cloud. The IT giant said its own customers – including American Airlines, Exxon Mobile, Geico and Walgreens – made workload decisions based on five key dimensions, that is resiliency, performance, security, compliance and total cost of ownership. The two companies were uniting to offer a service – Borealis Cloud by IBM and Borealis Data Center – that was designed to serve businesses in a range of use cases where maximising energy usage and cutting on emissions were “crucial”. Among these would be data storage and backup, regulated workloads, and addressing data residency.

For its part, atNorth revealed it was working with a company, somewhat ironically, based in the fossil fuel exploration industry on what was described as a journey of true cost and CO2-savings. The datacentre was being used in processing data from seismic explorations at sea, using a variety of connectivity offerings including Starlink satellites. In the computer mix was a need for cloud used in a burst model for workloads exceeding on-premise resources which needed to be run hot.

Read more about data centres and power consumption

For these operations, atNorth was offering significant advantages compared with UK datacentres with regards to PUE, tonnes of CO2 footprint, and in particular with CO2/kWh. The exploration company calculated that by 2024, its UK datacentre operations bill could be in the region of £173,000 per month, while that in Iceland would be in the region of £14,000.

State-owned company Farice boasts an annual turnover of €13m, and was established in 2002 to provide connectivity to service providers and datacentres on a wholesale level, city to city. It built FARICE-1 to Scotland then a second cable in DANICE to Denmark 2009. A third cable, IRIS RFS, was finally spliced in March 2023.

The company said that in 2023, the three submarine cables have increased theoretical availability tenfold, plus with massive speed gains. It can now provide an Iceland to Dublin POP to POP, end-to-end link with travelling time/latency reduced from 24ms to 10.5ms with a round trip of 21ms, a digital neighbourhood speed. The London time was reduced from 18.5ms to 15ms. With its Irish connection, Farice in very much plugged into a number of global networking routes principally to the western seaboard of France, Portugal and Spain, and potentially going all the way to Japan.

One of Farice’s assurances is that its submarine cables have never had an underwater cut during their lifetime, yet this has now been put front-of-mind since 24 October, when scientists at the Icelandic Met Office began monitoring a rise in seismic activity on the Reykjanes Peninsula, which may signal an impending volcanic eruption.

Commenting on the ramifications of this, Business Iceland, responsible for the branding and marketing of Iceland and Icelandic export industries, noted that the heightened intensity of these seismic events, particularly near the town of Grindavík, is seen as a significant indicator of potential volcanic activity in the area. 

Addressing the issue of potential interruptions to the datacentre industry, it added: “It is impossible to predict the exact timing and location of a potential eruption … Iceland is no stranger to volcanic activity and experiences a volcanic event every five years, on average. Three eruptions have occurred on the Reykjanes Peninsula in the past three years, none of which caused harm to people or disrupted air traffic. Icelandic authorities and the public are highly prepared for such events, and Iceland has one of the world’s most effective volcanic preparedness measures. Iceland’s geoscientists possess vast experience in dealing with volcanic activities.”

In short, an air of measured calm, and certainly not complacency, is in order. As the clients heading towards the island have shown, the datacentre industry may be sitting on top of seismic activity, but it’s also sitting on a potential technology goldmine. 

Read more on Datacentre cooling infrastructure