12:01 PM

Could Troubled Iceland Find A Silver Lining In Cloud Computing?


Two years ago I suggested Google should build its data centers in Iceland because of all the nearly-free green geothermal energy. Plus, it's a great location, midway between North America and Europe, with access to high speed submarine data cables (illustration above).

But it's not just Google that is building large data centers. There is growing demand for cloud computing services and that means companies will need to build lots more data centers, and operating costs will play a large role in determining success. Since electric power costs are one of the largest expenses for a data center, Iceland starts to look very attractive as a cloud computing site for many companies.

The attraction is even greater these days. Iceland's economy isn't doing too well following the collapse of its largest banks last year. And its economy continues to worsen with unemployment expected to reach nearly 10 percent in March from 1 percent a year ago.

The economic crisis means that land and labor costs are cheaper than ever. And the government is keen to encourage investment by foreign companies, which means tax breaks and other incentives. Plus the government is investing in programs that would aid the business environment such as its plans for "4000 man-years of job creation." This includes:

. . . supporting an innovation centre in Reykjavík, utilising specialists currently unemployed to assist start-ups, improving the competitive position of start-ups and innovative companies. . .

Part of the government's stimulus efforts include building more hydro-electric and geothermal power plants because only about one-quarter of the green power potential of Iceland has been tapped.

However, generating more electric power isn't very useful because you can't export it. You can't run a power line half-way across the Atlantic.

That means you have to convert the electric power into something that can be exported. Aluminum production requires a lot of electric power and so this has become the main method for Iceland to monetize its abundant green energy.

The irony is that aluminum smelters are anything but green, they pollute the environment and have been linked to increases in the number of birth defects and cases of cancer in local populations. And they don't provide much local employment. This is leading to growing criticism of the government's plans to expand aluminum production and the role of energy executives in selling cheap power to the smelters.

The web site Saving Iceland reports that earlier this month:

...three black dressed individuals, masked with aluminium foil, threw green Skyr (traditional Icelandic dairy product) on representatives of Icelandic energy companies during a greenwash presentation in the University of Iceland.

Skyr Thrown on Greenwashing PR Managers

[Throwing Skyr is a traditional way for Icelanders to communicate disrespect and disapproval.]

Converting power electrons into data electrons would be a much better use of Iceland's green energy. Cloud computing data centers would provide high quality jobs, and could help transition Iceland's dependence on polluting aluminum smelters.

The Invest in Iceland Agency has put together a few web pages and a pdf to try and drum up interest in data centers [Please see Iceland: The coolest location for data centers.] Not much luck so far. It probably requires a more direct approach by Iceland's government.

Maybe Google could step in and buy Iceland, which would about double its GDP. It could then relocate the entire Googleplex and many of its data centers. Google would be able to have its own banks, it could rename the Krona currency the Gollar, Googlers could enjoy an amazing number of outdoor activities, cheap housing, long summer days, and surprisingly mild weather. It could end Icelandic whaling, kick-out the polluting aluminum smelters, . . . and be out of reach of any pesky anti-trust lawsuits.

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Please see:

Saving Iceland » More power plants may cause more economic instability

Saving Iceland » The Hall of Shame

Google Invests in Geothermal Energy « Data Center Knowledge

Invest in Iceland Agency - Information centre for foreign investors investing in Iceland