Karlin Lillington: Why Iceland trumps Ireland as a home for data centres

A new subsea high-capacity fibreoptic cable between Galway and Iceland went live on Wednesday, opening up new digital opportunities for the two countries, and continental Europe.

Iceland has a subsea link with Denmark as well, so the new IRIS cable provides Ireland with its first connection to the European continent independent of cables that run through North America or Britain.

IRIS is a particularly exciting development for tiny Iceland — its population is just a third larger than Cork — giving it greater bandwidth, security of connectivity, and business potential.

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It also presents a modest but badly needed pressure valve to relieve strain on Ireland’s energy grid, because the Icelandic and Nordic mainland connection offers new data-centre options.

New connectivity options to Nordic locations with steady and reliable green energy will hopefully prompt a rethink across both Government and businesses

Successive Irish governments have seemed to have an ear only for the views of multinationals and data-centre lobbies, allowing their growth with little restraint or regard for the national energy grid’s capacity. Several energy industry reports and Dáil hearings have made clear that serious issues, including threats of rolling blackouts and possible restrictions on housing developments, have resulted.

But new connectivity options to Nordic locations with steady and reliable green energy will hopefully prompt a rethink across both Government and businesses. Iceland has nine data centres — tiny in comparison to Ireland’s 70 or so — but its operators are open for Irish business.

I talked this week to Dominic Ward, global chief executive at Icelandic data-centre company Verne Global, who disputes the argument regularly put forward by the Irish industry lobby and some politicians that data centres should be located close to businesses and consumers.

The $480 billion (€450 billion) global cloud computing industry is based on the fact that they do not.

“In the whole spectrum of applications, data and workflow, there are not really that many applications that are really latency sensitive [dependent on ultra-fast, local data-centre connections],” Ward says.

“And so that then begs the question for the whole industry: does computing really need to sit in expensive, congested, resource-constrained locations like metros such as Dublin or London or Frankfurt or New York or Amsterdam or Paris? And can we think about applications and data in a slightly different paradigm now, where we can push the data-centre footprint and the infrastructure supporting the processing requirements to a location that is more sustainable, more cost-effective?”

Iceland is attractive not just because its low temperatures make it easier to keep data centres cool — Ireland sells itself on its temperate climate for centres but Iceland trumps it

He should know the feasibility of this approach, as Verne Global’s target market is companies with high-intensity computing requirements, from small firms to “hyperscale” businesses such as multinationals with gigantic data management needs.

Iceland is attractive not just because its low temperatures make it easier to keep data centres cool — Ireland sells itself on its temperate climate for centres but Iceland trumps it. A much more timely, attractive argument, is Iceland offers 100 per cent green, renewable, and reliable geothermal and hydroelectric power. They don’t operate intermittently, unlike wind, Ireland’s main green energy source.

If you’re thinking the obvious, that Icelandic data centres would make this argument, then read IBM’s blog post from 2019 — “Iceland is the coolest location for data centres” — making exactly these points.

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Ward believes Dublin’s explosive data-centre growth was driven by multinationals utilising generous government supports to make the easy, but mostly unnecessary, decision to build big data centres next to their Irish campuses. “We all know that that came about actually for specific reasons around R&D and tax and other initial drivers for the businesses to be located there,” he says.

He offers Microsoft’s huge Dublin campus as a case in point. Building data centres nearby “was easy, because they had the lab, they had the power available. And because, actually, most customers have no idea, nor do they mostly care where their compute [data management and processing] goes.”

There’s no reason why Amazon wouldn’t make exactly the same decision and go to a location like Iceland or Finland

—  Dominic Ward

A big campus or data-centre hub “has been fine as a model, but now you’re talking about resource constraints”. He adds: “It’s very easy for someone like Google or Microsoft or AWS to say, no, we’ve got to keep on doing it this way because nobody’s actually challenging them or asking them the question, does that application set, does that data set really need to sit in a given location?”

He continues: “There’s no reason why Amazon wouldn’t make exactly the same decision and go to a location like Iceland or Finland or anywhere else and start to load balance that [energy and computing] demand themselves.” Some 70 to 80 per cent of total growth and data-centre capacity is in the cloud, Ward says, an implicit argument that at least two-thirds of data, workloads and applications could be in remote locations.

IRIS reduces a barrier to change. “Now you can actually move bits and bytes with very low cost, hyperefficient, almost unlimited amounts of capacity between Iceland and Ireland. And you find yourself being able to process in a truly sustainable, highly efficient environment.”

All of this counters the Government and industry narrative. But we can hope such arguments hit home with businesses, especially multinationals with shareholders increasingly focused on green credentials.