Data Centers Make Their Debut Near the Arctic Circle

On the banks of the river flowing through Borlänge, Sweden, construction is in progress for a vast new data center. This location was formerly occupied by a paper mill. When EcoDataCenter began excavation in September, its CEO Peter Michelson stated, “This facility once created paper, the fundamental resource of the newspaper information era. Now, Borlänge will generate the essential resource for AI and the upcoming information age.”

The Borlänge facility is among over 50 projects currently being constructed or planned across the Nordic region, which consists of Norway, Sweden, Finland, Denmark, and Iceland, as the demand for data centers capable of training and deploying AI models surges. Research by consulting firm CBRE indicates that no other area in Europe is seeing data center capacity expanding at such a rapid pace.

Recently, OpenAI revealed plans to implement 100,000 GPUs in a small Norwegian fjord village located in the Arctic Circle, followed by a similar announcement from Microsoft. Just in the past few weeks, French AI research lab Mistral revealed it would lease $1.4 billion in infrastructure in Borlänge; the data center operator atNorth disclosed plans for a massive facility elsewhere in Sweden; and another developer proposed a project that could more than double Finland’s current data center capacity upon completion.

This construction surge is partially driven by a notable shortage of locations in Europe that are adequately large and equipped with sufficient energy supply for AI workloads.

“There’s an extraordinary amount of demand out there, but meeting that demand is becoming increasingly challenging throughout Europe,” states Kevin Restivo, director of data center research at CBRE. “Power is becoming more valuable, and there’s a lack of it.” In this context, he remarks, “Norway specifically has surged as a hotbed for data centers.”

Previously, data centers in Europe tended to concentrate around major metropolitan and financial hubs—most notably Frankfurt, London, Amsterdam, Paris, and Dublin. To facilitate applications like algorithmic trading, which relies on minimal latency (or delay), cloud companies required a means to transfer data quickly. By those standards, the Nordic countries were less appealing.

However, the landscape began to change in the summer of 2023, following the overwhelming success of ChatGPT. Nordic government agencies started receiving inquiries from eager data center developers. “There was a clear shift,” says Jouni Salonen, a data center specialist at Business Finland, a government agency aimed at drawing trade and investment to the country. “Now, energy—and swift access to it—is clearly the key criterion. Developers are seeking sites that allow quick market access.”

The boom in the Nordic data center sector parallels the rise of neoclouds, specialized cloud companies that provide access to vast fleets of GPUs. Since they focus solely on AI workloads, which are not as concerned with latency, neoclouds can choose locations for their data centers in remote areas—even as far north as the Arctic Circle. According to CBRE, neoclouds make up the majority of data center capacity expansion in the Nordics.

For this new type of developer, the Nordic nations offer a unique advantage. There is ample land and energy available, and the region boasts some of the lowest power costs in Europe. Additionally, the abundance of renewable hydropower and wind energy, coupled with a cool climate that reduces the energy needed for hardware cooling, assists data center operators in meeting stringent EU emissions standards.

“Locating here doesn’t compromise much, but it provides significant gains: plentiful green energy with minimal competing industrial demand,” explains Philippe Sachs, chief business officer at neocloud company Nscale, which manages the Norway site leased by OpenAI and Microsoft. “When planning to build extensive, giga-factory-style computing clusters, this is undoubtedly the best place to do it in Europe, if not the world.”