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Swedish government study advocates tax cut for data centre providers

Written by: James Bourne

A study by the Swedish government has pushed for a 97% reduction in electricity taxation for data centres in the Scandinavian country by January 2017.

The study, which has been sent to the country's Ministry of Finance, proposes a 0.005 krona, or USD 0.0006/kWh, pricing for data centres in Sweden as well as a 97% tax cut for data centres and data service providers.

Industries such as manufacturing already enjoy tax breaks on its power and electricity requirements, which the report asserts should extend to the data centre industry. Anne Graf, investment and development director of Swedish data centre hub The Node Pole, is optimistic about potential change.

“It’s been a discussion going on in Sweden for a while, [the government] commissioned this study and the proposal is here now,” she tells CloudTech. “We’re very pleased with what they’ve suggested, which is basically just treating data centres the same way as other industries,” she adds. “It’s also a statement that Sweden is interested in this industry and wants to be a part of it growing, which is great as well.”

The report, the subject area of which has already been examined by Denmark, Finland and Norway, has been in the works since 2014 and has passed through two different governments in opposing political parties.

The submitted study will be examined by the finance ministry before moving into public consultation. Following that, the legislative process will kick in, and Graf estimates the process to take approximately six months. She notes the political ramifications give cause for more optimism.

“We have reason to believe that all parties are for this change,” she explains. “I don’t think this is particularly controversial because it’s not about treating data centres differently in any way; it’s actually about treating them the same way as we treat other industries.”

Companies already utilising the Node Pole include renewable energy firm Hydro 66, bitcoin technology provider KnC Miner, and most famously Facebook, where it all began for Lulea and whose warehouse is claimed to be the most energy efficient computing facility ever built.

The social giant is well on the way to building a second data centre, with eight having been built overall in the past four years. Graf notes: “Facebook’s investment was confirmation for us that we were right in thinking this was a great place for data centres. Their investment was kind of the go-ahead for us to do this in a more public way.

“Facebook has been hugely important not only for the Node Pole but also for the region, both in terms of jobs created and bringing this industry to the attention of Sweden,” she adds.

Regular readers of this publication will note a trend by larger vendors to build data centres closer to their customer base – IBM SoftLayer launched its first Italian cloud data centre in Cornaredo back in June. Despite this, in October research from Synergy found the US (44%) and China (10%) overwhelmingly the most popular global data centre locations.

Graf argues the opportunities the Nordics brings, such as natural energy and lower costs – Hydro 66 claims they can do colocation at half the cost compared to if they were in London – is a good compromise for a few milliseconds of latency.

“I think as both technology advances and the cost of connectivity has gone down massively over the last couple of years, it makes much more sense to move the data to where the power is produced,” she explains. “I think the trend will definitely go towards looking at more efficient solutions, both when it comes to costs and environment, and I think the Nordics is important in that sense.”

Key to that going forward, Graf hopes, is pushing through lower tax legislation in line with other industries. “We’re very happy with how this has developed, but we think that this energy tax message will hopefully mean that more of the really big players will start looking at the Nordics again,” she adds.

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