North American/Iceland/European data center mindsets - Doug Mohney

Views and Opinions on Green IT (Feb 22 2012)

1. 

   Power is cheap and cooling is "free."  What's not to like about moving data center business to Iceland?  For American-based companies, there are some unique issues. The best way to think about it: Iceland is like Europe, only better.

   From the East Coast of the United States, Iceland provides a faster (lower latency) and MUCH cheaper (power) version of a data center in London -- but with lots of available space and vendors falling over backwards to get your business.  The country operates in the same time zone as London and the rest of the UK half the year.  But one-way broadband latency to Iceland from NYC is half that of to London, due to geography. 

   Power is much cheaper because Iceland has abundant hydroelectric and geothermal power that comes in at roughly about a third of the power cost per megawatt than London.  Iceland officials have quoted $37 a megawatt hour (Mwh) for a long term contract.  Compare that to $150 or more per Mwh in New York City.  Additional savings accrue when you subtract power and maintenance costs for traditional HVAC overhead, since new data centers in Iceland are designed to use "free" cooling.

   Green power (carbon-free hydro and geothermal) has been a big selling point, but you should think about a different type of green beyond power and money.  It's a greenfield, with new data centers using modular building technology to quickly build out space.  You can roll in and get competitive pricing on the space that you want, be it a single rack, a bay full of racks, or even your own building! Construction pricing and labor are highly attractive when compared to building new in any place in the U.S.

   For VAT (Value Added Tax) purposes, Iceland treats data center services in the country the same as other European countries and the government is openly supportive of bringing data center business into the country.   You don't hear about a lot of enthusiasm out of the UK government for more data centers and many IT businesses in the country are busy relocating servers into green(er) facilities, but that doesn't reduce the total cost of power.

   About the only drawback when you compare Iceland and London from a North American perspective is the additional latency added when moving from London to Iceland, but that hasn't stopped initial customers for Verne Global's data center such as Datapipe and Greenqloud.  Latency issues are also mitigated with Colt putting a point of presence directly into Verne's data center, changing the "last mile" issues into the "last meter" between a rack and high-speed broadband.

   With all that said, I think it will take a bit more work to get U.S. companies into Iceland data centers.  I suspect we might see Verne teaming up with the appropriate Icelandic government representatives in Washington D.C. and New York City to promote the country's emphasis on data center business.   By that time, Verne will hopefully have some clear-cut partnerships/packages -- and complementary marketing materials -- for server build-outs handled in country by Icelandic-based IT shops as well as cloud-based providers able to quickly provide competitively-priced services. 

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