After Facebook, Sweden is set for more data center deals, says power utility

The nation's low electricity costs are likely to attract more data centers, including mega-data centers. And Norway is expected to follow Sweden's footsteps.

By Lefteris Karagiannopoulos, Reuters - May 10, 2018
Vattenfall logo is seen on its headquarters in Stockholm, Sweden April 18, 2016. (Pontus Lundahl / Reuters / TT News Agency / File Photo)

OSLO — Sweden’s low electricity prices are likely to attract new data centers to the country this year, according to Swedish utility Vattenfall, which said it is discussing deals with Silicon Valley companies and Chinese firms.

The Nordic countries, which can generate electricity relatively cheaply from renewable sources such as hydropower and wind, have long been a magnet for heavy power industries, but are now attracting power-hungry data centers.

Sweden, which also has nuclear reactors, tends to have the cheapest electricity prices during most of the year.

Vattenfall already supplies power to a number of data centers in Sweden, including Facebook’s facility in the city of Lulea, which Facebook decided on Monday to double in size.

[‘Facebook effect’ turns northern Swedish steel town into tech hot-spot]

“We are actively discussing bringing more data centers to Sweden with big U.S. companies. We also had our first discussions with Chinese firms that showed interest,” Vattenfall’s head of strategy Andreas Regnell told Reuters.

“Based on these discussions, I expect this year that more data centers will come to Sweden, though not of the Facebook magnitude. But mega-data centers will come as well by 2020,” said Regnell.

Sweden plans to decommission two of its remaining eight nuclear reactors by 2020, but big wind projects that will enter the Nordic power system will make up for lost ground and keep prices competitive, Regnell added.

In 2017, Sweden cut its tax rate on electricity for data centers by 97 percent, with Norway following suit to compete with its neighbor.

Vattenfall said it would seek to win supply contracts itself, but added regardless who won the deals, new centers would be good news for utilities in Sweden, where margins are tight.

“We will be happy even if it is not us that will sign the electricity supply contract… total consumption grows and that means prices will go up, which will create profit for us anyway,” he said.

Vattenfall believes other power-intensive industries can benefit from Sweden’s competitive prices, such as carbon fiber makers, but data centers are its prime target.

“Data centers are the number one, two and three targets for Sweden at the moment. After these comes everything else,” he said.