Market Trends of Nordic Data Center Industry
Tier 3 Data Center Dominates the Market, while Tier 4 Growing the Fastest
- The tier 4 data center reached a capacity of 273.91 MW in 2023, and it is further projected to exhibit a CAGR of 15.99%, surpassing 808.27 MW by 2029.
- Over the forecasted years, demand for facilities in tiers 1 and 2 is expected to slowly decline. However, unexpected disruptions and prolonged outages are still likely to fuel growth. Although there is already sufficient retail colocation space in these prime locations, massive projects are driving demand to support the increasing smartphone users, social media presence, and the need for hyperscale cloud providers, who are seeking lower latency and greater efficiency.
- Most clients will eventually require more advanced data processing, storage, and analysis, leading them to transition to tier 3 and tier 4 facilities. In 2022, tier 3 data centers dominated the market due to their advantageous features. Most of these centers are situated in the Nordic region, which offers ample power and cooling resources and high redundancy. They boast an impressive uptime of 99.982%, equivalent to just 1.6 hours of downtime per year. The growing demand for edge and cloud connectivity is expected to expand tier 3 data centers further.
- The tier 4 type is expected to experience a CAGR of 15.99%. Many industrialized countries are adopting tier 4 certification for total fault tolerance and component redundancy. As of 2023, the Nordic region had 15 tier 4 data centers. The demand for tier 4 data centers is poised to surge in the coming years, driven by the increasing adoption of cloud-based services and the subsequent need for advanced facilities offering colocation space with cutting-edge technology.
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Sweden Accounted for Majority Share in terms of Volume in 2023
- Sweden's data center market is rapidly expanding, driven by its digital prowess, government support, and a rising appetite for cloud services.
- Sweden's government actively fosters a conducive business climate for data centers and AI startups through incentives and supportive policies. The nation's emphasis on internet adoption and AI, coupled with the target to achieve net-zero emissions by 2045, appeals to eco-conscious enterprises. Key initiatives, such as the Digital Transformation Infrastructure Plan and the issuance of green bonds, bolster this eco-friendly stance. Consequently, a notable 75% of Sweden's electricity, predominantly sourced from hydroelectric and nuclear power, is chosen by data center operators. This segment contributed significantly in terms of market share in 2023.
- In Sweden's data center market, prominent investors such as atNorth, Bahnof, Conapto, and Digital Realty, alongside local players like EcoDataCenter and Equinix, are shaping the landscape. In addition, construction contractors, such as Dornan, DPR Construction, and Granlund, serve as crucial partners to the market's leading operators, bridging global expertise with local insights.
- Stockholm, bolstered by its robust global ties and prime Nordic positioning, has cemented its status as a pivotal data center hub. Notably, cities such as Avesta and Östersund are witnessing a notable uptick in their data center presence. The capital has become a magnet for substantial investments, drawing interest from both local and international data center players. Concurrently, Stockholm is actively pursuing carbon neutrality and enacting eco-conscious policies across industries. Leading the charge, operators such as Conapto and Multigrid have already transitioned their Stockholm facilities to run entirely on renewable energy.
- Sweden's data center market sees a surge in investments, with newcomers like Evroc leading the charge. For instance, the Swedish startup Evroc recently secured an impressive EUR 13 million in a pre-seed funding round. To scale up to a whopping EUR 3 billion in just two years, aiming to establish and manage two significant data centers. This substantial injection of capital is poised to catalyze the growth of the Swedish data center market in the coming years.
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