Building European competence: Smart Specialization and Datacenter Ecosystems

BlogiDigitalisaatioLiiketoimintaVerkot ja tietoliikenne 9.5.2016

Europe is full of countries with different characteristics. In the South the climate is usually warmer, whereas in the North it is colder. It does not require much research to end up to this conclusion.

However, many other things also differ, such as scope and volume of major industries, available skills and competencies of people, focus and investment level for research and development, to name a few. When Europe intends to work together in various areas there are numerous possibilities to smart specialization – performing the activities in those parts of Europe where it is, in each case, most optimal.

In the ideal situation we can build an ecosystem around our mutual challenges, where several partners from all around the continent bring their strengths to the table and complement each other.

Let’s take a look at ICT activities as one example. Building a service might require applications, software tools, computing and data infrastructure to run the applications. Also needed are datacenters, where the infrastructure is located, and human skills to develop, deploy, maintain and market such services. Depending on the size of the activity all this might happen in one location – or be distributed to several sites.

Due to the ever growing requirements for ICT services, the number of large datacenters is growing – both in terms of number and size. Today, many of them use tens or even over hundreds of megawatts of electricity, making the electricity bill one of the most dominant element in their running costs. This makes people think how to optimize the energy consumption – not only due to cost but hopefully also because of environmental issues – and brings things like cool climate for free (outside air) cooling to the table.

Nordic countries have recently invested a lot in making the Nordic area attractive to the datacenter business. Various international companies have placed their datacenters in the Nordic region, namely in Finland, Sweden, Norway and Iceland. This is partly due to cool climate which enables energy savings, as the cooling of the datacenter can be done by simply ‘opening the windows’ instead of using electricity through cooling machines. However, the main reason relates to reasonable electricity prices – if electricity prices ever can be reasonable.

A simple calculation demonstrates some of the advantages:

Use for example a 20 MW datacenter with measured average efficiency in CSC’s datacenter in Kajaani, Finland (PUE = Power Utilization Efficiency, which in Kajaani in 2015 was 1.03), and multiply the energy consumption with a typical Finnish electricity price, which is less than 60 EUR/MWh when exceeding 5 MW consumption.
Compare this with electricity prices in Central or Southern Europe, which according to the European statistics could be for example 150 or 190 EUR/MWh. It naturally varies from country to country, and some might get better deals with electricity providers than others, but still the difference is huge. Not to mention that it is unlikely that you will reach a PUE close to 1.03 in a warmer climate.

After doing the math, you might end up saving for example 20 MEUR annually just from the electricity, by placing a 20 MW datacenter to Finland instead of somewhere else. (To be honest, I have to say that the similar benefits could probably be reached in our dear neighbor countries, too.)

In addition to lower costs, there are also other benefits. Many of our datacenters use renewable energy (for example hydro or biomass), the geographical and political conditions are stable, and at least in Finland, Sweden and Norway, fiber networks are efficient and you will find a lot of experienced people around.

I would also like to point out that Finland’s goal is not only to attract companies to place racks of computers in Finland, but to promote a whole ecosystem of activities around it, such as research, ICT services, development, manufacturing of datacenter equipment, cloud computing and platform for start-ups. This way the benefits through collaboration will go beyond from merely saving money. CSC itself is a company with a staff of 300, and it has a special task to support research and science. CSC has built its competence successfully during the last 45 years.

In the future, a Nordic location will become even more attractive. CINIA has just launched a new sea cable from Helsinki to Northern Germany, and a cable from northern Finland to Asia is being planned.

Smart specialization in European datacenters could provide opportunities closer collaboration between different players in ecosystem. Everyone could do what they can best. Placing the datacenters in remote locations does not limit having the competent people being spread all around Europe or involving different stakeholders from their own locations. Now we just have to take action!

– Kimmo Koski, CEO, CSC – IT Center for Science –

CSC – IT Centre for Science Ltd develops, integrates and offers globally recognized high quality IT specialist services for research, education, public administration and companies. WWW.CSC.FI