Colocation is the practice of housing multiple customers’ servers and other computing hardware in a shared facility. Businesses rent space for their own servers, which then share networking, security measures, power sources and cooling systems to keep their servers running efficiently and cost-effectively.

Because of Sweden’s cold climate and green energy network, not only can data center operators in Sweden capture and reuse excess heat, they can even earn money by selling it back to the grid. Close to 100 percent of Sweden’s power is carbon-neutral thanks to an extensive supply of hydropower and other renewable sources like wind and biofuel.

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Sweden has become something of a colocation hotspot. International colocation giants like Equinix and Interxion have large Swedish operations while Nordic companies like DigiPlex have quickly established themselves as major players. Startups including Multigrid and Eco Data Center are also hoping to ride the wave. Several companies, such as Fortlax, Hydro66, and Etix Everywhere, are attracting international clients by leveraging Sweden’s northern qualities.

But it’s not just Sweden’s cold weather that brings in customers. The country’s infrastructure and unparalleled connectivity to the rest of the world also plays a major role, as does its long-term political stability.

Servers in a data center. Photo: Creative Commons

Other factors like its central location in the Nordics, large base of multinational companies, thriving startup sector and large public sector all drive digital transformation, providing an attractive growth platform for technology-driven companies. This unique combination makes the country one of Europe’s most ideal locations for international companies to invest in or expand their operations. 

Tech companies want to go green

With tech companies becoming increasingly aware of the negative environmental impact of our insatiable data consumption, moving their servers to Sweden can be a win-win, said Fredrik Jansson, the chief strategy and marketing officer at DigiPlex.

“When you use social media, binge stream TV shows, access your bank online or whatever, all of that starts a process in a data center somewhere,” he explained. “If that data center is coal-fired, that means that you as a consumer unknowingly become an environmental polluter. Sustainability-conscious consumers who are starting to realize this are beginning to demand environmentally-friendly options for their technology usage.”

Tech companies are getting that message loud and clear, Jansson said. In a recently-released survey of some 300 IT companies in Sweden and Norway, DigiPlex found that sustainability has rocketed up the companies’ list of priorities, going from the 27th largest worry just two years ago to the fourth biggest priority today.

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“Companies realize that they need to make a green choice, and if you look at it from an international perspective, Sweden is the perfect location to host data,” he said. “If you currently have your data in the UK, which has a much different energy mix than Sweden and uses more fossil fuels, you would get all kinds of advantages by moving to Sweden. You would slash your costs because electricity prices are lower here plus you would use much less electricity because Sweden has a much more efficient energy network.”

With the nation well on track to hit its goal of running entirely on renewable energy by 2040, huge players like Amazon and Facebook have already made the move to Sweden to take advantage of its position as the EU leader in sustainability. Not to mention, it has the highest share of renewables coupled with a 98 percent carbon-free energy footprint. Google has confirmed it is preparing a site in Sweden, and just recently Microsoft announced a huge land acquisition in two cities; however, the nature of the project has yet to be confirmed.

Heating homes through data

DigiPlex – which is one of 30 data centers in Stockholm connected to the district heating and cooling networks – has upped the green ante of its colocation centers through a first-of-its-kind heat reuse agreement with Stockholm Exergi, the capital’s leading heating and cooling supplier and the front runner of Stockholm Data Parks.

The excess heat generated at DigiPlex’s data center will go directly into Stockholm Exergi’s water-based heating system, allowing consumer-level tech consumption to heat as many as 10,000 homes. The company has a similar setup in Oslo, where heat from its data center is funneled to some 5,000 homes, through Oslo Fortum Varme.

Mats Nilsson Hahne, an independent colocation and data center services consultant, said that the innovative heating solution in Stockholm with Stockholm Data Park, is just one example of the city’s colocation appeal.

Image: Business Sweden 

“Stockholm is also the most connected city in the Nordics by far. Even if you add up all of the internet traffic in Copenhagen, Oslo and Helsinki, it doesn’t match what you have in Stockholm,” Hahne said. “A lot of the internet traffic that goes through this part of the world tends to go through Stockholm.”

He adds: “Stockholm is a highly, highly connected city but from a storage and computing power standpoint, you don’t need to be in the city. Up north, the climate is even colder, energy prices are lower and because land is cheaper, it makes it much more cost-efficient to set up a colocation center.”

Growing energy needs

The Nordic data center construction market is estimated to attract annual investments of €2-4.3 billion by 2025 according to the Nordic Council of Ministers. This would mean an installed annual capacity of 280-580 MW per year.

Our rapacious data appetite is growing rapidly and increasing exponentially. That data demand is opening the door for startups like Multigrid, a data center designed for heat reuse, which plans to open a colocation centre in Stockholm by the end of 2019. The company’s president and CEO, Mattias Ganslandt, said there are a number of reasons companies are increasingly turning to colocation.

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“The most important trend is simply the tendency to build at a much larger scale,” he said. “Small, inefficient facilities are no longer adequate solutions and computing is moving into much, much larger facilities. A number of customers are moving into the cloud rather than owning their own hardware, so cloud computing is driving the need for shared data centers.”

Ganslandt said that the rise of machine learning and the massive amounts of computing power needed to mine for cryptocurrencies is also fueling the colocation demand, as is the desire on behalf of large multinational companies to know that their data is protected.

“These large customers need to have control of their data, because it is proprietary intellectual property, so to be GDPR-compliant they need to know where their most vital data is physically located,” he said. “Sweden’s long tradition of being a high-tech economy and our concentration of high-tech companies and a well-educated workforce, combined with an abundant and sustainable energy supply and stability on a macro level, makes it a very desirable destination.”

This article was produced by The Local Creative Studio and sponsored by Data Centers by Sweden.