At the outset, the benefit to locating data centers in Iceland was the use of 100% green power, the cost of that power, and the ability to use outside air for the majority of cooling. As we look at it today, technology progress within the industry, and aggressive programs in other countries have lessened some of these advantages. The combination of improved air-based cooling systems and increased data center operating temperatures now make free cooling is practical in many countries. To remain competitive, Iceland needs to emphasize and validate the value of green power and make sure that its pricing is as good or better than competing countries.
The biggest challenge at the outset was the cost and reliability of the network. That is still a challenge. My view was that this should be taken out of the equation and that access to Icelandic data centers should be provided through hand-offs in London, Amsterdam, and other locations. Done properly this would make Icelandic data center offerings more competitive, less challenging, and, hopefully, lessen concerns about reliability.
Over the last four years, other challenges have emerged including natural risks from volcanoes and earthquakes, the financial crisis in Iceland, and unfavorable tax status for certain users of data centers. The natural risks are mitigated through proper design and siting and the other risks can be solved through legislative efforts and careful structuring of contracts for future users and developers.
The most positive developments in Iceland are the emergence of new Icelandic data center and cloud providers. These are small scale companies, but they are actively dealing with many of the issues above. I believe that there are opportunities for more companies like this and that they can create more significant employment opportunities than the mega data centers. I also believe that the mega data centers will come, but that they are several years and many challenges away.
