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Swedish Parliament approves lowered tax rates for data centers from January 1st, 2017

Nov 24th, 2016   Press release


[Sweden; November 24th, 2016] The decision taken yesterday by the Swedish legislator lowers the electricity tax rate for data centers in Sweden to 0.005 SEK or USD 0.00054 per kWh. This 97% tax cut will come into effect by January 1st, 2017 and will be applicable to both existing and new data centers exceeding 0.5 MW capacity.

The issue of lowering tax rates for data centers has been under political scrutiny for several years. The initiative has had a strong consensus across political aisles and has undergone an analysis by the Government to assure that it gives a long-term incentive for the industry. Yesterday the Swedish Parliament decided upon the proposed tax legislation which lowers the tax rate.

The new tax rate for data centers will correspond to the same rate as for other industrial sectors in Sweden. The changed tax rate from today’s 0.194-0.295 SEK or USD 0.02-0.03 per kWh to 0.005 SEK or USD 0.0006 per kWh, will result in a 97% electricity tax cut for data centers. The new tax scheme applies to both existing and forthcoming actors and is applicable for data centers exceeding at least a 0.5 MW capacity, measured as installed effect excluding cooling facilities.

This Parliamentary decision sends a clear message that Sweden is serious about becoming the green home of the internet and taking global cloud service leadership over the short and long term”, comments Peter Ericson, Chairman of The Node Pole.

The decision has been expected from a global marketplace perspective, according to The Node Pole.

“The combination of low electricity prices, a competitive tax rate and the abundance of renewable energy provides a case for a long-term investment climate that is extremely competitive.” Peter Ericson adds.

A strong case for investors
On average, roughly half of the Total Cost of Operation (TCO), which is the total annual cost of running a data center, consists of the electricity costs including tax and grid costs. As an example with a data center with an installed capacity of 10 MW the low electricity price and the new tax rate would give an approximate annual saving of 1.6-2.7 MUSD, which corresponds to ca 30-50 % decrease of costs (depending on location in Sweden). This based on figures from energy providers as well as data center industry analysts. Effectively, Sweden as of January 2017 provides a 3.5-4.5 ¢/kWh market case with close to zero carbon emissions and favorable conditions for long-term cloud industry development.

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Data center investors are now looking at a total running electricity cost – which is the cost of energy, grid and tax – somewhere between 3.5 to 4.5 cents (USD) per kWh, which is a very strong case, most likely the strongest in the world compared to average total electricity prices for running data centers” comment Rick Abrahamsson, Industry Expert at the Swedish energy company Vattenfall.

A joint strategy from Sweden
Sweden goes from word to action in proving the case for European leadership in creating competitive conditions for data center investments. Sweden, and especially the north of Sweden, has a low carbon footprint from power generation – only 0.4 g/kWh compared to 600 g/kWh in the US and 450 g/kWh in the EU, according to the International Energy Agency. Low emissions are safe-guarded by the political consensus on the goal that Sweden should have a fossil free energy production by 2045. The high climate gains, the low energy price and tax, together with the Swedish Government initiative – Team Sweden Invest – provides a long-term political, environmental and economic case for data center investments and indeed sector innovation and development throughout all of Sweden.

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In order to facilitate sector wide investments for energy intensive industries under these favorable conditions, two Swedish energy companies, Vattenfall and Skellefteå Kraft, were earlier this fall announced as new owners of The Node Pole – and are expected to attain the formal ownership of the organization by February 2017.

Under the new ownership, The Node Pole will widen their offer to attract also other types of energy intensive industry investments – working in close contact with other fully commercial actors and site offerings throughout Sweden and in partnership with the dedicated Government initiative Team Sweden Invest as well as the Swedish Trade & Invest Council – Business Sweden.

 

Inquiries:

Peter Ericson
Chairman, The Node Pole
+46 (0)70 555 88 99 | peter@thenodepole.com

Rick Abrahamsson
Head of Industry Attraction, Vattenfall
+46 (0)70 575 77 71 | rick.abrahamsson@vattenfall.com


For high-resolution press and infographic images: flickr.com/photos/thenodepole/albums


About The Node Pole

The Node Pole region encompasses (as per November 2016) four municipalities in the very north of Sweden, just by the Arctic Circle. The Node Pole is being acquired by the Swedish energy companies Vattenfall and Skellefteå Kraft which will assume ownership by February 2017.

The cluster is as of today home to data centers run by Facebook, Hydro66 and Fortlax among others. The Node Pole also encompasses The Node Pole Alliance: +60 data and data center management companies (Schneider Electrics, Siemens, ABB, Telia Carrier, Emerson among others) and has numerous global data service clients – as well as joint market and university cloud computing R&D data center 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