Sweden Builds Arctic Data Center Amid Growing European Demand

The Data Centers Have Arrived at the Edge of the Arctic Circle

In a remarkable shift, data centers are now being built at the edge of the Arctic Circle, with Sweden’s Borlänge town serving as one of the latest additions to this growing trend. The construction of a sprawling new data center on the bank of the river that runs through the town is a testament to the increasing demand for data storage and processing capabilities in Europe.

The facility, being developed by EcoDataCenter, will produce raw material for AI and the next information age, according to its CEO Peter Michelson. This marks a significant departure from the town’s past life as a paper mill, which once produced paper, the raw material of the newspaper information age. The new data center will serve as a hub for training and running AI models, leveraging the abundant renewable energy available in the region.

The Borlänge facility is part of a larger trend of data center development across the Nordic countries – Norway, Sweden, Finland, Denmark, and Iceland. Research by consulting firm CBRE indicates that this region is experiencing data center capacity growth at an unprecedented rate, with nowhere else in Europe witnessing such rapid expansion.

Last year, OpenAI announced plans to deploy 100,000 GPUs in a Norwegian fjord town in the Arctic Circle. The move marked a significant development in the growing demand for AI infrastructure, and was quickly followed by Microsoft’s announcement of its own plans for a data center in the region. In recent weeks alone, French AI lab Mistral has announced a lease worth $1.4 billion at Borlänge, while data center operator atNorth has revealed plans for an enormous facility elsewhere in Sweden.

The building frenzy is being driven by an acute shortage of sites in Europe that are large enough and equipped with sufficient energy supply to support AI workloads. As Kevin Restivo, director of data center research at CBRE notes, “There’s an extraordinary amount of demand out there, but servicing that demand is increasingly an issue across Europe.” Power has become a precious commodity, and the scarcity of it is driving companies to seek out new locations for their data centers.

Previously, data centers in Europe tended to cluster around metropolitan and financial centers – particularly Frankfurt, London, Amsterdam, Paris, and Dublin. These cities offered the best connectivity options, allowing cloud companies to transport data with minimal latency. However, against these criteria, the Nordic countries were less attractive.

The picture began to shift in the summer of 2023, six months after the breakout success of ChatGPT. Nordic government agencies started fielding calls from eager data center developers, who recognized the potential for the region to offer a unique combination of power and connectivity. “There was a clear change,” says Jouni Salonen, a data center specialist at Business Finland. “Now, power—and quick access to power—is clearly the main criteria. They are looking for sites where they can get access to the market quickly.”

The growth in the Nordic data center industry has coincided with the emergence of neoclouds – specialist cloud companies that sell access to huge fleets of GPUs. Because these companies serve only AI workloads, which are not as latency-dependent, they are free to establish data centers in far-flung corners of the region, even as far north as the Arctic Circle.

Neoclouds account for the majority of the data center capacity growth in Nordics, according to CBRE. The region offers an attractive proposition for these companies, with abundant available land and energy, and power that is among the cheapest in Europe. Additionally, the glut of renewable hydropower and wind energy, and the cool climate, which reduces the amount of energy required to cool hardware, helps data center operators meet stringent EU emissions targets.

“You’re not really trading away much by locating there, but you’re gaining an enormous amount: abundant green contiguous power with little competing industrial demand for that power,” says Philippe Sachs, chief business officer at neocloud firm Nscale. “When you’re thinking about trying to build very, very large, giga-factory-style compute clusters, it’s far and away the best place to do it in Europe, if not the world.”

As the demand for data storage and processing continues to grow, it is clear that the Nordic countries are well-positioned to meet this need. With their unique combination of power, connectivity, and government support, these regions are set to play a major role in the development of AI infrastructure in Europe.

The future of the data center industry looks bright, with significant growth expected across the Nordic countries. As the demand for AI infrastructure continues to grow, it is likely that we will see even more data centers being built in this region – and nowhere else in Europe.

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