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The Nordic data center construction market is expected to grow at a CAGR of 7.33% during 2023-2028.
MARKET OUTLOOK
The Nordic data center construction market was valued at USD 1.68 billion in 2022 and is expected to reach USD 2.57 billion by 2028, growing at a CAGR of 7.33%. One of the reasons that operators prefer Nordics for data center developments is due to the cold climate of the regions, which helps data center operators cut down the cooling costs and reduce their PUE significantly. Many governments across the Nordics area are launching AI strategies for implementing AI in various sectors generating huge loads of data sets and driving the need for data center construction.
KEY HIGHLIGHTS
- Denmark has topped the list amongst Nordic countries, investing more than USD 500 million in 2022. Sweden and Norway followed Denmark in terms of high investments in 2022.
- Operators are signing PPA with renewable energy providers to increase sustainability by decreasing their carbon footprint. For instance, Telia and Telenor signed a PPA with Better Energy for a solar park construction in Denmark.
- There is increased growth in cloud regions set up by multiple hyperscale data centers operators, such as Google, Microsoft, AWS, Oracle, and Meta.
- There is an increase in initiatives being taken by various governments across the regions to make the respective countries carbon-neutral in the future. Operators are moving through more sustainable construction methods like wood and mycelium.
- Supply chain disruptions, increasing inflation rates, shortage of skilled workforce, and political disturbances in Russia will likely hurt the market.
KEY TRENDS IN THE NORDICS DATA CENTER CONSTRUCTION MARKET
5G Deployments Fueling Data Center Investments
- Nordic countries are deploying 5G rapidly, driving investments in data centers, especially edge data centers.
- In July 2022, Eltel and Telenor Norway signed an agreement for USD 36-40 million for 2023-2024 for upgrading and strengthening the telecommunication network of Telenor 5G in Denmark.
- Telenor and Tele2 combined to form a joint venture known as Net4Mobility which expects to cover 90% Swedish population with 5G by the end of the year 2023 and 100% by 2024.
- Iceland is showing tremendous signs of 5G progression. Síminn, an Icelandic network operator, has targets for nationwide 5G coverage by the end of 2022.
Increasing Cloud Services Adoption
Nordic companies mainly opt for a hybrid cloud approach by enjoying public and private cloud benefits such as enhanced security. Companies across Nordics are shifting their workloads to the cloud to strengthen their digitalization goals and enjoy cloud advantages. For instance, a Swedish bank migrated its services to the AWS cloud to analyze customer behavior and make data-driven decisions effectively. Hyperscale cloud services providers such as AWS, Google, Microsoft, Oracle, and Meta are increasing their service capabilities for supporting businesses.
Rising Awareness of Carbon-Neutrality
In Nordics, renewable energy sources such as wind, geothermal, and hydro are abundant. Operators are aligning their goals with the carbon-neutral goals of the respective countries. For instance, Green Mountain, a colocation operator, uses 100% of renewable energy in its data center operations.
Denmark is setting up energy islands to harness the resources in the Baltics and will be the first in the world. They will have the capacity to not only supply Denmark but also supply neighboring countries. Also, Nordic Governments are releasing policies relating to sustainability and energy reuse. For instance, the Swedish Government released energy policies such as the Electricity Certificate System to ensure energy is used through renewable energy sources such as solar, wind, hydro, or geothermal.
Tax Incentives Boosting Data Center Construction
Various countries are providing tax incentives for investors based locally or even globally, which will aid in constructing data centers. The Government of Denmark launched a Green Tax Reform and green R&D, which falls under the Danish Recovery and Resilience Plan, for which a USD 250 million investment is planned. Further, Norway has an abundance of hydropower supply; therefore, the government provides favorable and flexible tax rates on the consumed electricity to the industries which are energy intensive.
COMPETITIVE ANALYSIS
- Some major Nordic data center construction market vendors include companies Arup, Caverion, Cowi, Designer Group, RED, and Granlund Group.
- These vendors are collaborating with operators to provide reliable construction solutions. For instance, Keysource provided its planning, engineering, and construction services to Namsos Datasenter (NDS) for edge data center construction.
- Vendors focus on regions with lower land and labor costs while ensuring the data center construction specifications are followed.
- There is an immense focus on reducing the data center's energy consumption and carbon emission levels to improve their green credentials.
MAJOR VENDORS
Prominent Support Infrastructure
- ABB
- Alfa Laval
- Carrier
- Caterpillar
- Cummins
- Eaton
- HITEC Power Protection
- Legrand
- NetNordic
- Reillo Elettronica
- Rittal
- Rolls-Royce Power Systems
- Schneider Electric
- Socomec
- STULZ
- Trane Technologies
- Vertiv
Prominent Construction Contractors
- Arup
- Coromatic
- Caverion
- COWI
- Designer Group
- RED
- Dornan
- EXYTE (M+W GROUP)
- Gottlieb Paludan Architects
- Granlund Group
- MT Hojgaard
- Mace Group
- ISG
- Sweco
- Mercury
- Ramboll Group
- YIT
Prominent Data Center Investors
- Apple
- AQ Compute
- atNorth
- Bahnhof
- DigiPlex (IPI Partners)
- Digital Realty
- EcoDataCenter
- Equinix
- Green Mountain
- Hyperco
- Verne Global
- Meta
- Microsoft
KEY QUESTIONS ANSWERED
- How big is the Nordic data center construction market?
- What is the growth rate of the Nordic data center construction market?
- What is the estimated market size in terms of area in the Nordic data center construction market by 2028?
- What factors drive the Nordic data center construction market growth?
- How many MW of power capacity is expected to reach the Nordic data center construction market by 2028?
Table of Contents
Companies Mentioned
- ABB
- Alfa Laval
- Carrier
- Caterpillar
- Cummins
- Eaton
- HITEC Power Protection
- Legrand
- NetNordic
- Reillo Elettronica
- Rittal
- Rolls-Royce Power Systems
- Schneider Electric
- Socomec
- STULZ
- Trane Technologies
- Vertiv
- Arup
- Coromatic
- Caverion
- COWI
- Designer Group
- RED
- Dornan
- EXYTE (M+W GROUP)
- Gottlieb Paludan Architects
- Granlund Group
- MT Hojgaard
- Mace Group
- ISG
- Sweco
- Mercury
- Ramboll Group
- YIT
- Apple
- AQ Compute
- atNorth
- Bahnhof
- DigiPlex (IPI Partners)
- Digital Realty
- EcoDataCenter
- Equinix
- Green Mountain
- Hyperco
- Verne Global
- Meta
- Microsoft
Methodology
Our research comprises a mix of primary and secondary research. The secondary research sources that are typically referred to include, but are not limited to, company websites, annual reports, financial reports, company pipeline charts, broker reports, investor presentations and SEC filings, journals and conferences, internal proprietary databases, news articles, press releases, and webcasts specific to the companies operating in any given market.
Primary research involves email interactions with the industry participants across major geographies. The participants who typically take part in such a process include, but are not limited to, CEOs, VPs, business development managers, market intelligence managers, and national sales managers. We primarily rely on internal research work and internal databases that we have populated over the years. We cross-verify our secondary research findings with the primary respondents participating in the study.
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Table Information
| Report Attribute | Details |
|---|---|
| No. of Pages | 295 |
| Published | May 2023 |
| Forecast Period | 2022 - 2028 |
| Estimated Market Value ( USD | $ 1686 Million |
| Forecasted Market Value ( USD | $ 2577 Million |
| Compound Annual Growth Rate | 7.3% |
| Regions Covered | Denmark, Finland, Iceland, Norway, Sweden |
| No. of Companies Mentioned | 48 |
