Norway’s datacentre builders focus on energy efficiency

AI partnership 

Telenor’s investment in Skygard is happening against the backdrop of the company’s February 2024 partnership deal with global artificial intelligence (AI) specialist Nvidia.

“With Nvidia we will establish independent, Norwegian-owned cloud platforms operated in


Norway,

where artificial intelligence is one of the central drivers,” said Jannicke Hilland, executive vice-president for infrastructure at Telenor. “This will enable Skygard’s datacentres to deliver highly efficient, advanced and secure solutions.”

The consortium behind Skygard will invest €210m (NOK 2.4bn) in the initial phase of the joint venture, which includes the construction of a datacentre at Hovinbyen, a district of Oslo designated for urban redevelopment up to 2030. Groundwork began on the Hovinbyen site in March 2024.

The current geopolitical situation and the AI revolution heightens the need to build secure data storage facilities in Norway, said Hilland. “The capital investments plan will ensure that Norway gets datacentres that underline security and sustainability,” she said. “Our ambitions for Skygard are strong and the timing appropriate. The current geopolitical situation bolsters the need for secure solutions. We are also seeing an increasingly pressured market when it comes to capacity.”

Skygard is on course to launch operations at Hovinbyen in the first half of 2025, and the colocation facility will serve multiple tenants. Skygard is planning to build two additional datacentres in the greater Oslo region. Once fully developed, the three datacentres are earmarked to have a combined capacity of 40-MW.

Eidsiva, one of Norway’s largest energy and telecommunications’ providers, is also moving into the secure storage datacentre space. The company, which is owned by municipalities in central Norway, completed the acquisition of a 6-MW datacentre in Gjøvik at the end of May.

“We view the safe storage datacentre sector as prime for investment,” said Henning Olsen, Eidsiva CEO. “Those actors in


Norway

’s public and private sectors who deliver socially critical services need secure storage and processing of large amounts of data. Datacentres that have 100% national and public ownership are important building blocks to develop Norway’s digital foundation.”

Energy-efficient facilities

Industry-wide, the transition from large-scale, high-energy consuming datacentres to more energy-efficient facilities gained greater momentum and urgency in 2023, when the Norwegian government ended the payment of tax breaks to power-intensive industries.

Before 2023, and during the period 2016 to 2022, datacentres paid reduced electricity tax rates corresponding to other mainstream industries.

Operations in Norway currently receive no subsidies and pay standard rates of tax on electricity usage. The 2023 tax change came about when Norway’s Labour-led government removed tax reductions and benefits for crypto mining facility operators. The government justified the blanket removal of tax breaks on the basis that it could not, under prevailing laws, distinguish between crypto miners and the general datacentre industry.

The tax decision, which was opposed by the Norwegian Datacentre Industry (NDCI), did not affect traditional power-intensive industries that continue to pay a reduced electricity tax between 3% and 6% lower than the rate paid by other business sectors, including datacentres.

According to NDCI figures, the datacentre industry in


Norway

employed 2,300 full-time workers at year-end 2023. The industry had installed capacity of 501-MW at the end of that year. Of this amount, an estimated 150-MW is currently utilised, corresponding to 1% of Norway’s total production of power, 98% of which is produced by hydro stations. The datacentre industry’s power usage is forecast to increase to 1.9% of total production by 2028.

Sector growth

The underlying growth in Norway’s datacentre sector continues to flow from leading global players, including Microsoft and Google. Microsoft built its first datacentre in Norway in 2019, and Google broke ground on a datacentre costing €600m at Skien in February 2024. The 240-MW Skien facility, located in the south-east, plans to offer its surplus heat waste to energy groups owned by local municipalities.   

It is set to go live in 2026, according to Tine Austvoll Jensen, head of Google Norway. “The facility will bring with it a number of positive ripple effects in the form of value creation and jobs both locally and nationally,” she said.

The issue of new large-scale datacentres wasting surplus heat is rapidly becoming a major source of concern for legislators and local municipalities in Norway.   

Petter Egil Røkke, research director at Stiftelsen for Industriell og Teknisk Forskning’s thermal energy division, wants the government to compel municipalities to ensure facilities generating large volumes of heat are located close to industrial centres that can make use of the surplus.

“As an alternative option, companies with specific heating requirements could be persuaded to establish in the vicinity of facilities offering large volumes of surplus heat,” he said. “This would require a system to identify and implement measures that incentivise businesses to form so-called symbiotic clusters.”

The Norwegian government’s latest National Energy Efficiency Action Plan does address general public concerns about energy intensive industries. The government has proposed marginal amendments to the existing Energy Act that would require developers of datacentres and compatible facilities to perform a cost-benefit analysis to outline how they plan to utilise their surplus heat. The amendment proposal would apply to datacentres with production capacities of 20 MW or above.