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Norway sheds light on how CEE can be a beacon for data centres

The exponential rise in global computing power and data storage is driving unprecedented demand for digital infrastructure, and particularly for data centres, which is opening up huge opportunities for CEE. The region has made a good start in establishing itself as a prime location for data centres and should look to Norway’s success as a possible roadmap for the way ahead.

 

Digitalisation has accelerated during the pandemic as governments, businesses and consumers have embraced the digital economy. Working from home and shopping online have become the norm, while the drive towards cloud computing, 5G, AI and smart cities is increasing the need for data centres to process and distribute ever-increasing quantities of information at faster and faster speeds.

Within CEE, internet usage is rising rapidly, driving demand for data centres to serve the region. Its growing reputation as a hotbed of technology and innovation means it is also attracting attention as a location for data centres to serve customers elsewhere in Europe and beyond.

Providing the conditions to encourage investment in data centres can help drive economic growth, creating huge opportunities for CEE, as set out in CMS CEE Digital Horizons report published in December. It is already attracting users from the ICT, finance, insurance and utility sectors as well as public administration, and there are huge opportunities for growth.

Eva Talmacsi, CMS partner and co-head of the CEE TMT practice, said: “Digital transformation is at the heart of future prosperity and resilience for CEE countries. Data centres have a crucial role to play in this transformation and the region can benefit by attracting international investors in this sector. Norway’s success in this area is outstanding and there is a lot to be learned from its approach and its ambitious vision to become an international data centre location.

Norwegian know-how

Norway introduced a data centre strategy in 2018 and updated it in 2021. It sets out Norway’s vision to make the country a magnet for data centres and to use the sector to help drive economic growth, with the government forecasting the number of jobs in the sector to rise from 2,000 to 11,000 by 2025.

The strategy is built on creating a stable framework for the industry, removing certain property taxes on machinery and accessories, keeping down tax on electricity, developing ICT skills, and encouraging sustainable energy use. The Norwegian Data Centre Industry Association has also been set up to represent the sector.

Belinda Ingebrigtsen, CMS partner, Norway, said: “Norway was the first country to develop a data centre strategy. The strategy is an ongoing process which is still evolving. As an economically and politically stable country, Norway is an attractive location for data centres and there aren’t many obstacles when coming to Norway to do business here.

The data centre-friendly approach seen in Norway runs through the planning and construction process, as well as in the operation of data centres. As a major energy producer with a high proportion of renewable power, Norway can not only offer low-cost electricity, it also helps companies address mounting sustainability challenges. Belinda Ingebrigtsen said: “As an oil and gas nation, our government wants other feet to stand on and building on these green industries is a major point of focus in Norway.

The country’s energy heritage has left it well-equipped with engineers and electricians to work on the construction and operation of data centres, and the state actively encourages closer ties between the data industry and education to develop a well-trained ICT workforce. Although the demands of the sector were initially focused on serving Norway’s domestic need for data centres, there has been an increasing focus on marketing the country as an international hub for data centres.

Data centres tend to be clustered around the largest cities, and as intensive energy users, a topic of debate is how to harness waste heat for projects such as district heating systems and even fish farms. Agreements for such projects have already been entered into.

Belinda Ingebrigsten said: “Norway is unique in many ways and has been working in the data centre field for several years. To be able to provide secure and stable data centre services, to be predictable and to deliver projects on time, the key lesson is to have the site and the infrastructure, such as fibre, cables, and electricity in place as soon and as ready as possible, and this needs planning. Stability is very important and you know if you are building a project in Norway the rules are not going to change suddenly.

According to Eva Talmacsi, many countries in the CEE region are still in the process of transforming from economies dependent on manufacturing or fossil fuel reserves into more diverse innovation-driven economies built on investment in supercomputing, AI, cybersecurity and digital innovation hubs. She said: “To drive this digital transition, the region needs to attract and encourage investment in digital infrastructure including data centres, just as Norway is doing.

CEE’s digital foundations

CEE already meets some of the criteria set out by Norway, including the availability of well-educated and skilled IT professionals, a resource that international companies have already tapped into for R&D and programming. While there is room for improvement to digital infrastructure, particularly in rural areas, CEE has made big advances in closing the gap on western Europe. Many countries have attractive tax systems and support to lure foreign investment, along with relatively low construction costs and land prices.

Belinda Ingebrigtsen said: “To be a data centre nation, you need to prepare so that everything is in place to reduce the time to market. In Norway, the industry has shown that it can work with a wide variety of customers and is capable of meeting deadlines and delivering on contracts.

Eva Talmacsi said: “Norway has a lot to teach CEE, in particular the willingness to embrace the data centre industry and to foster its growth by coordinated incentives implementing a long term vision. CEE has got the foundations in place to build on its early success and use data centres to drive digital transformation; it is now up to national governments to draw lessons from Norway’s success.

Contacts

Belinda-Taranger-Ingebrigtsen
Belinda Taranger Ingebrigtsen
Partner
Stavanger
Eva Talmacsi
Eva Talmacsi
Partner
London

Further reading

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Interview with

Belinda-Taranger-Ingebrigtsen

Belinda Taranger Ingebrigtsen

Partner, Stavanger

Eva Talmacsi

Eva Talmacsi

Partner, London