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Government reports proposes 97 per cent tax cuts for Swedish datacentres

A government study, 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 per cent tax cut for datacentres and data service providers, previously exempted from the lucrative basic industry tax scheme.

Demand is high for cheap, fast and green data management solutions (opens in new tab) 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 utilise 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-harmonisation 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. (Sweden Readiness Report (opens in new tab))

Anne Graf, Investment and Development Director of Sweden’s largest datacentre region The Node Pole (opens in new tab) where global players such as Facebook, Hydro 66 and KnC Miner 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 datacentre solutions and those who aspire colocation solutions or cloud services from providers within Sweden (opens in new tab) 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 (opens in new tab), 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 harmonisation 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 (opens in new tab).

Also, findings of a recent report by BroadGroup, the Data Centre Nordics-region (opens in new tab) [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 (opens in new tab) (In Swedish) by the northern regional government or Norrbotten, Sweden, prognoses 200 new mega datacentres (>5 MW) to be built in the EU until 2020.