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Government study finalized: Suggests massive cuts in electricity taxes for datacenters in Sweden

Oct 12th, 2015   Press release


A 97% reduction in electricity taxation for datacenters – this is the proposal by a government commissioned study on October 9 handed in to the Swedish Ministry of Finance. Sweden is aspiring to become “the home of the internet” as global demand for Cloud solutions surges. The investigation especially highlights the need of the tax harmonization to be legislated swiftly to adhere with strict EU-legislations soon coming into force – and proposes Swedish legislations to be in effect no later than January 1st, 2017.

The government study, on October 9 submitted for political and parliamentary deliberation, proposes a 0.005 SEK or USD 0.0006/kWh pricing for data centers – the same low going rate as for the rest of the industrial sector – and a 97% tax cut for data centers and data service providers, previously exempted from the lucrative basic industry tax scheme.

Demand is high for cheap, fast and green data management solutions in the global market – as businesses are rapidly moving their data into cloud-based solutions. The Swedish government – aspiring to take a central part in this trend and to utilize the abundance of renewable energy, fiber network infrastructure and tech work force for data cluster development – today were handed the pre-commissioned ”Investigation into the opportunities for a sector-neutral and competitive energy tax on electricity”, (Fi 2014:10) which has been under way since early 2014.

The proposal corresponds with tightened EU-harmonization regulations. Today, the price differs between both industrial sectors and between regions, with the northern parts having the lowest cost of 0.194 SEK or USD 0.023/kWh.

Anne Graf, Investment and Development Director of Sweden’s largest datacenter region The Node Pole where global players such as Facebook, Hydro66 and KnCMiner are already embedded, sees this as a vast opportunity for attracting new investors:

“We have already seen how our offering has been quite lucrative for global actors whom seek both high service and globally competitive costs when they invest in our region. Both those actors who seek complete data center solutions and those who aspire colocation solutions or cloud services from providers within Sweden and indeed within The Node Pole region will gain substantially from these lowered rates.”

The proposal entails a considerable incentive for data providers for whom electricity costs are a main chunk of the overall cost:

“This is a clear signal to the market that Sweden aspires for global cloud service leadership. With the wave of cloudification and with 50 per cent of corporate data going into the cloud within the next three years according to analysts at 451 research, we now widen our offering – both in terms of everything from complete build to cloud service provisions, but also in terms of width of offering between high performance computing solutions to the most price competitive storage solutions. 

We now see how large corporations seek portfolio solutions combining all these types of offerings – some of the portfolio for fast access and management, some data for cheap storage. This tax harmonization makes The Node Pole region’s combined offering both the most high tech and price competitive portfolio of offerings – in addition to being the greenest offering around” adds Anne.

Also, other market drivers pull data management services towards Sweden and the Nordics. As data is getting both quicker and cheaper to ship over distances, and while energy transfer costs increase, the Nordic countries are also in high demand due to both energy abundance but also their fiber network development – with Sweden, Finland and Norway all ranking in the global top 5 in World Economic Forums Networked Readiness Index 2015. Also, findings of a recent report by BroadGroup, the Data Centre Nordics-region [Sweden, Iceland, Norway, Finland and Denmark], will see a surge in third party data over the next three years, increasing by almost two and a half times in square space and triple in terms of MW power by the end of 2017. As of last week, the Swedish Ministry of Enterprise & Innovation also released a new export strategy focused upon facilitating a better foreign investment climate and better terms for high tech sector growth and exports.

A comprehensive study by the northern regional government or Norrbotten, Sweden, prognoses 200 new mega datacenters (>5 MW) to be built in the EU until 2020.

Inquiries:
Anne Graf
Investment & Development Director – The Node Pole
+46 70 530 55 80 | anne@thenodepole.com | LinkedIn


About The Node Pole
The Node Pole region encompasses four municipalities in the very north of Sweden, just by the Arctic Circle. The cluster is as of today home to ten datacenter (run by Facebook, KnC Miner, Hydro 66 and Fortlax among others).The Node Pole also encompasses The Node Pole Alliance: +80 data and datacenter management companies (Schneider Electrics, Cisco, Flextronics, among others) and has numerous global data service clients – as well as joint market and university cloud computing R&D datacenter initiative SICS ICE.

The region has earned the epithet The Node Pole due to its northern position and emergence as a global hub for data traffic and data management innovations. Sweden enjoys one of the lowest electricity pricings in Europe and one of the world’s premiere digital infrastructures and high tech labor forces. The region is one of the most geologically, politically and socially stable areas in the world. Read more at www.thenodepole.com