Article

DATA CENTRE DEVELOPMENT IS AFFECTED BY STATE PREDICTABILITY AND SUPPORT FOR THE MANUFACTURE OF RENEWABLE ENERGY

15 Jan 2019

Mārtiņš Paurs, SIA “Telia Latvija” Commercial Director

“Data centre business in the Baltics should not be regarded in isolation from business in the wider geographical region. It can be considered that the Baltic data centre market is quantitatively saturated. It is supported both by the rather large data centre areas developed by the local market players so far and the new Telia data centre in Helsinki that is in the immediate vicinity of the region, which in terms of both size and effectiveness considerably surpasses the existing smaller data centres in Finland and the Baltics.

Several circumstances hinder the high-quality development of the data centre area. These are the electricity, distribution, transmission and mandatory procurement component costs, as well as political risks and, albeit to a lesser extent, the availability of a skilled workforce. Another important aspect is the availability of renewable energy. It is important to note that the data centre business is highly conservative and investments are usually long-term. Without a predictable tax, workforce, and renewable energy policy it is difficult to assure the suitability of the dominant global IT companies of the region for the development of large data centre projects. Therefore politically stable and predictable countries, which support the manufacture of renewable energies at the state policy level, are the first choice for data centre placement. In our region, these are the Scandinavian countries. For example, Apple has chosen Denmark, the world leading country in wind energy, to host two of their data centres already. Facebook has opened one of their three data centres located outside the USA in Denmark.

However, data centre development in the region is a certainty, since it will follow the development of other economic sectors. It there is demand, there is also an offer. It will be qualitative development, as it is elsewhere worldwide. Virtual data centre services (cloud services) will be increasingly developed and offered, which is an opportunity for data centre service providers to serve new customers without developing physical data centre areas. Companies have already been choosing to rent virtual computing resources instead of physical server acquisition and maintenance for some time. Therefore the future opportunities for data centre companies are still optimistic but the term “data centre” is no longer seen as something physically tangible.”

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