Data centres in Denmark – welcome to the boom

Denmark’s population is roughly the size of Wisconsin’s and its area less than half the size of Maine.

Its small proportions notwithstanding, Denmark is currently the scene of a data centre spree. Major tech corporations such as Apple, Google, Facebook and others are constructing or planning the construction of mega data centres around the country, and more are underway.

The reasons for this cluster effect are numerous, and the most important are emphasized below together with certain caveats.

Reliable and green infrastructure

Security of energy supply in Denmark is excellent. The electricity power grid is modern and developed and never subject to blackouts. Further, Denmark is among the leading countries when it comes to green transition. Today, more than 30 % of the country’s energy consumption comes from sustainable sources such as wind and solar power, and the figure is growing.

Similarly, the Danish broadband connectivity is greatly developed, up to date and well connected to the rest of Europe. 

Like the infrastructure, the level of security is excellent. The country practically never suffers major natural disasters, the economy is solid and the political situation stable.

On top of that, Denmark is consistently acclaimed by The World Bank as one of the absolute best countries in the world for doing business. Corporations don’t encounter much red tape and hardly any corruption here.

Lastly, the country is seeing somewhat of a hub effect in the digital field, attracting more and more specialized businesses and professionals.

What's the catch?

So, what’s the catch? What are the obstacles to overcome before, during and after the construction of a Danish data centre?

First off, finding the right location and buying the necessary property should be handled carefully. Buyers risk grievances with property owners, neighbors and local politicians over depreciation and effect on local agriculture – and in a small country such as Denmark, local news stories easily reach the national press.

Although the new mega data centre facilities are generally met with good vibrations – especially from city councils and local businesses – the excitement that followed the announcement of the country’s first mega data center is cooling off somewhat.

Concerns have been voiced over the impact on society and in particular on power consumption, security of supply, and energy tariffs and prices.

Another important thing to consider is the comprehensive Access to Public Information Act (Offentlighedsloven) that was put into effect a few years ago. It should be read carefully, as it affects all communication with the public sector.

Finally, the legal and contract cultures should be taken into account. By way of example, Danish contractors are generally reluctant to submit to comprehensive US-style construction contracts, as Danes come out of a tradition for simpler and shorter contracts where much faith is put into general terms, case law and a "reasonability test". This system works by and large, and the legal culture gap can be bridged by a willingness of both parties to accept a reasonable degree of submission to the other party's culture, compliance requirements and concrete risk assessment. 

Read Investor Update 2018 Q4.