Sweden Cuts Tax on Datacenter Power
As the data continues to pile up, so too does the stiffening competition to store and manage it.
The latest gambit comes from energy-efficient Sweden, where the Scandinavian nation's parliament has approved a tax measure designed to attract datacenter construction: Beginning January 1, 2017, Sweden will substantially lower the electricity tax rate as a complement to its strategy of investing in energy-intensive sectors such as cloud computing.
Officials said the new Swedish tax rate for datacenters brings the industry in line with other industrial sectors. The Swedish parliament voted last week to lower the electricity tax rate for datacenters by a whopping 97 percent to $0.0006 per kilowatt/hour from the previous rate of between 2 and 3 cents per kWh.
The new tax rate applies to both existing and future datacenters in Sweden with a capacity exceeding 0.5 megawatts. In a significant exception, the tax break excludes cooling facilities, which tend to account for the majority of datacenter energy requirements.
The energy initiative reflects Sweden's push to become one of Europe's largest datacenter hosts. An advocacy group called Node Pole that includes four municipalities near the Arctic Circle is promoting the region as a source of cheap renewable energy along with minimal cooling costs for datacenter operators.
So far, the group has attracted datacenters operated by Facebook (NASDAQ: FB), Fortlax and colocation specialist Hydro66, which claims to operate one of the world's first datacenters powered by hydroelectric energy. Other datacenter customers in the region include Schneider Electric (EPA: SU) and Siemens (ETR: SIE).
The region also hosts a cloud computing research initiative dubbed SICS ICE (Infrastructure and Cloud datacenter test Environment).
Meanwhile, two Swedish energy companies, Vattenfall and Skellefteå Kraft, announced earlier this year they have acquired Node Pole in a deal scheduled for completion in February 2017.
Sweden's push to become a global datacenter hub rests on cheap energy produced by renewable sources with "close to zero carbon emissions," promoters noted.
"Datacenter investors are now looking at a total running electricity cost—which is the cost of energy, grid and tax—somewhere between 3.5 to 4.5 cents per kilowatt hour, which is a very strong case, most likely the strongest in the world compared to average total electricity prices for running datacenter,” argued Vattenfall's Rick Abrahamsson.
Facebook was among the earliest tenants at the Arctic Circle outpost. The social media giant broke ground on the facility in Luleå, Sweden in 2011. Because of its climate, which allows the company to use outside air for cooling, Facebook selected the site for its reliable and locally generated hydroelectric energy. In turn, heat generated by rows of servers is used to heat the facility.
Up to 60 new datacenters may be built in Western Europe by 2020, according to the most bullish estimates.