The Nordics is a growing hub for hyperscale and colocation data center investments. The location, climate, and access to multiple different renewable and sustainable energy sources are driving more and more developers and users to host their digital assets in this market.
Further driving this growth is the need for these data center operators to get access to large parcels of land and government support for the development of data centers. This has led to rapid growth in the Nordic data center market, with the market expected to reach $10.21 billion within the next five years.
As the backbone of global connectivity, subsea cable operators are following data center companies to the Nordics by providing local and international network access across the region and fostering the continuous market growth.
Data center acquisitions on the rise
The combination of ideal factors in the Nordic region has led to the expansion of the data center market, with the industry expected to grow at a compound annual growth rate of 11.76 percent between 2022 and 2027. The market is further expected to grow due to the increased acquisition activity by leading data center providers in the region as evidenced by several transactions in 2021.
For instance, in July 2021, Green Mountain was acquired by Azrieli Group, an Israeli real estate firm. The acquisition includes three data centers in Norway and is aimed at expanding the company’s global data center presence. Europe and offer enhanced services to its customers. In 2022, data center-focused acquisitions closed in the first half of the year totaling $24 billion, which indicates rising interest in these types of deals.
This expedient growth within the Nordics data center market has quickly translated to an increased demand for redundant and diverse high-capacity subsea connectivity throughout this region.
Hyperscalers shift subsea expansion strategy
Within the Nordics, Sweden, with over 35 percent of the overall data center capacity added, leads the market in investments, followed by Finland and Denmark. Finland witnessed investments by Google, which announced the expansion of its Hamina data center facility. Various local data center associations also exist in Nordic countries, working to formulate policies and support data center development. For instance, Denmark has The Danish Data Center Association (DDI) representing the data center ecosystem in Denmark, including operators, vendors, municipalities, educational institutions, and utility companies.
More specifically, hyperscale investments have increased the need for subsea connectivity and increased bandwidth. The investment from hyperscalers is also shifting the strategy of subsea cables regarding both design and the location of the cable landings.
Previously, many large carriers would invest in subsea cables and then sell connectivity to customers. Now, many of the investments and efficacy have shifted to Hyperscalers. Today, Hyperscalers are building data centers across the globe and need high-capacity, high-speed network services, and the required interconnection to transmit data. As a result, new cables are being built in growing markets, like the Nordics, which are experiencing accelerated demands.
As the Nordic data center market rapidly expands, driven by hyperscale investments and government policies supporting sustainable power solutions, subsea cable operators are looking to expand within this region. The high-capacity, high-speed network services required by hyperscalers are only available through these robust subsea cables, making these systems critical infrastructure for the digital age. As we continue to see growth in demand for bandwidth and connectivity, we expect subsea cable operators will need to increasingly expand their networks throughout the Nordic countries to meet customer needs.