Proponents of Iceland's alternative data center resources say the economic crisis could make their “green IT” offerings an even better investment.
Iceland claims the infamous distinction of being the first nation to fall in the worldwide financial crisis in August 2008. The country has seen its three largest private banks enter into receivership, its stock market lose 90 percent of its value, and its currency -- the krona -- lose over half its value. Unemployment is at a 40-year high.
“There’s no question that we now find ourselves in a difficult environment,” acknowledges Jeff Monroe, CEO of nationally funded Icelandic data center services provider Verneglobal. “The financial markets are uncertain and in turmoil, and a lot of people on the outside are focused on the risks.”
Before the crisis struck, Verneglobal was a highly touted “green energy” data center company positioned to provide resources at dramatic savings to major companies on both sides of the Atlantic, thanks to Iceland’s abundant supplies of geothermal energy.
Now, Monroe insists the financial crisis helps emphasize the natural geothermal attributes that Iceland possesses, which make for ideal zero-carbon data center sites. “In a nutshell, the crisis has caused us to continue our focus on this inexpensive green energy, which also can help the world economy,” says Monroe.
"We... tell prospective clients and investors that devaluation of the krona makes investment in the data centers even more attractive than it already was with the green energy savings,” says Thordur Hilmarsson, managing director of the government-backed Invest in Iceland Agency, which helped launch Verneglobal.
There is some other good news. Prior to the financial crisis, the biggest concerns that potential Verneglobal data center clients had were bandwidth and redundancy. Verneglobal had 720-Gbit/s and 1.9-Tbit/s cables linking its data center in southern Iceland with Europe and with the U.S. However, more cable capacity was needed to enable failover capability, in the event that one of the cables malfunctioned.
Thankfully, some of the additional bandwidth was bought before Iceland’s economic implosion. “The good news coming out of the financial crisis was that the government was proactive in terms of funding this new cable project,” says Monroe. “We have 5.2 Tbit/s of capacity coming online in June 2009.”
Verneglobal projects that its remaining cable-laying will be completed in mid-2009 and that its data center will be in production in 2010. “We have the funding. It is not dependent on the local government -- and we are certain that we can provide Internet service providers and others tens of millions of dollars of savings over an average data center deal, which typically spans 10 years. Now it is up to us to complete the 12 to 14 months of work that remain to bring the data center online.”
Verneglobal also is working to quell the fears of potential clients concerned about Iceland’s seismically active environment, and whether the data center will be able to stay online in event of a seismic disaster. “We are located in a very geologically stable area,” says Monroe. “Iceland also has a data communications ring that surrounds the entire island. In the event there is a break anywhere in the data communications ring, there is immediate failover to another point of the ring that is operating.”
Monroe and others in Iceland who want to see the data center work are fielding daily questions from anxious onlookers about the impact of the financial crisis. “Beyond a doubt, we have had increased inquires,” says Hilmarsson. “We have two data center projects, and Verneglobal is moving forward. The other data center is in the planning stages."
— Mary E. Shacklett, President, Transworld Data
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Thanks for the update, Mary. Interesting post. But what I really want to know is whether Icelanders are still ranked as the happiest people on the planet. I'm guessing no, which shows that a. happiness is fleeting or b. that those surveys are dubious at best.
I agree with you whole-heartedly. Alliances like this can bring a whole new level of redundancy and competitiveness to the smaller players, making the services even more widely available, both from a capacity/resource perspective, and skills/human resources.
On data center cooperation--I wouldn't be surprised if you started seeing alliances between data centers for redundancy and coverage.
Joint efforts like this are already happening in other industries (semiconductors)--and it could further compress expense while it also improved coverage.
The technical skills "gap" could also be tackled that way.
When it comes to insuring or even contingency planning against natural disaster risks, Southern California isn’t the only example. There is the Bay Area for seismic activity, Portland (or the new GooglePlex in the Dalles, Oregon) for seismically active volcanoes, the Southeast for hurricanes, and the Midwest for tornados or flooding. It really is all about the actuarial, isn’t it. And that is a very old business with a lot of data…
I would argue that the green aspects of a zero carbon data center will become increasingly important in the next few years as we reach the predicted knee in the CO2 concentration curves, and the effect it has on the global weather patterns. I know a 50 year snowfall record falling isn’t exactly normal here in the Pacific Northwest. But then, global climate change is a myth.;^)
If those data centers then insist that their suppliers are carbon neutral—at least for the products they supply to the data center, it could be an environmental coup. I know that more than a few companies have enough of a need to greenwash that buying disaster space in Iceland wouldn’t be all that risky for them. Especially given the physical location—effectively splitting the distance between Europe and North America.
Labor, especially technical talent, is relatively easy to address. Fewer and fewer on-site and hands-on tasks are necessary in the current state of the data center. Rack jockeys can be easily enough trained to swap out failed components, and grid/virtualized computing are driving us to true lights out data centers. With a redundant infrastructure, a little cooperation amongst the data centers, and the geographic closeness could use geo-clustering to further increase redundancy, creating a geothermal cloud, if you will. Support and programming staffs could mostly be located offsite initially, until the local labor pool could be increased.
I wonder if they need a spokesman here in the US? Sorry, gotta go make a quick long distance call…
Tectonic realities are a challenge that the data centers are trying to mitigate, Paul. They are addressing this with redundancy measures, etc.,--but only time will tell (such as when they go into production in 2010), if that mitigation is convincing for clients.
You raise another interesteing question when you talk about insuring this.
Many companies secure insurance for disasters such as the failure of a data center. A majority of clients may well base decisions on whether their underwriters will insure data centers in seismically active areas. It seems to me that in the past (e,g, data centers in Southern California), the insurance has been there.
How can verneglobal say they are located in a geologically stable area when it is well know that Iceland is being Frequently jostled by tectonic movements? I believe there is a far greater risk with regards to natural disaters and damage to sub-oceanic fibre going in and out of Iceland than the presnt financial crisis. The million dollar question now is whether both risks can be reasonably easy to mitigate and insure against???
While generally a proponent of environmental issues, I have to wonder if Green is enough of a reason to build a data center in Iceland. That's one positive against a list of negatives - Iceland sits atop an active volcanic rift; redundant connectivit is just coming online; country economy is tough; limited workforce - not an overabundance of technical staff as in some countries. I could see this as a possibility for a limited number of multinational companies.
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