There is a high demand for the construction of new data centers to serve the growing need for digital infrastructure. Finland’s emerging data center cluster has the potential to generate major growth in its economy.
Oxford Research conducts an evaluation in 2014 of the opportunity posed by the potential build of a data center cluster in Finland. Prior to this report, prospects for such data centers in Finland were little understood. As Finland struggles to emerge from recession, these centers are shown to offer major economic growth by transforming Finland into a European hub for digital infrastructure.
Finland poses an attractive host for such a development. The country offers world-class energy infrastructure, developable land, cool climate, network connections and a cheap, skilled and available workforce. Its regulatory environment is said to be superior to other locations. Once historically powered by paper plants, it is now undergoing economic restructuring. The main skills offered by its workforce, largely traditional trades such as mechanical engineering, will continue to be utilised in the new digital infrastructure. Factors attractive for its old industry such as availability of land, water and energy, will be required for these hubs. However, in spite of these features, Finland has to date received relatively little investment compared to other countries. Google’s EUR 800 million investment in 2009, transforming an old mill into a modern data center in Hamina, has been Finland’s largest ever greenfield foreign investment.
The economic opportunity posed by attracting data center investments is immense. Global data center demand is predicted to rapidly increase, with 60 new data centers expected across Western Europe by 2020. These centers provide a major source of employment. For instance, at its peak, Google’s data center in Hamina employed 1800 engineering and construction workers, 230 employees in operations and maintenance, and generated millions of Euros in wages. This is without all the new jobs created throughout the data center value chain.
“A cluster of data centers could provide Finland with thousands of new jobs and billions of investment capital, but also new innovations and opportunities to leverage the digital infrastructure.“
Finland is already in the process of attracting other large data center investments. At the time of study, five investments had already been announced, including by large technology firms such Microsoft and Yandex. Three of these five investments totalled a massive EUR 1.3 billion. Over the next decade, Oxford Research estimates that the development of a data cluster in Finland could create 32,000 to 50,000 years of employment and generate a total economic impact of between EUR 7 billion and EUR 11 billion.
In order to attract such investment, Oxford Research suggests five key action points for the Finnish Government to address. First, a clear plan for developing a data center cluster including mobilising innovation and education. Second, ambition to realise the full potential of the digital economy and the ripple effects generated by data center investments. Third, greater effort into placing data centers at the top of the foreign direct investment agenda. Fourth, improving the capabilities of SMEs within the data center supply chain. Fifth, preserving a data-center friendly regulatory environment, balancing the privacy of users and the interests of security.