A former paper mill in Borlänge, Sweden, is being converted into a data center, symbolizing a regional shift where the Nordic countries are becoming Europe's fastest-growing hub for data center construction. This building frenzy is primarily driven by the immense power demands of AI and a severe shortage of suitable, energy-rich sites elsewhere in Europe.
The region's appeal lies in its abundant, cheap, and green energy from hydropower and wind, ample available land, and a cool climate that reduces cooling costs. This is particularly attractive to "neocloud" companies, which specialize in AI workloads and are less concerned with latency, allowing them to locate in remote areas, even within the Arctic Circle.
Main Topics: The rapid growth of data centers in the Nordic region; the driving role of AI power demands and European energy shortages; the specific advantages of the Nordics (green energy, land, climate); the emergence of "neocloud" companies.
On the bank of the river that runs through the Swedish town of Borlänge, construction is underway on a sprawling new data center. The site previously housed a paper mill. When the developer, EcoDataCenter, broke ground in September, its CEO Peter Michelson declared, “The facility once produced paper, the raw material of the newspaper information age. Now, Borlänge will produce the raw material for AI and the next information age.”
The Borlänge facility is one of more than 50 currently under construction or soon to be developed across the Nordics—the region made up of Norway, Sweden, Finland, Denmark, and Iceland—as demand escalates for data centers suitable for training and running AI models. Nowhere else in Europe is data center capacity growing faster, according to research by consulting firm CBRE.
Last year, OpenAI announced it would deploy 100,000 GPUs in a tiny Norwegian fjord town in the Arctic Circle. Then Microsoft followed suit. In the last few weeks alone, French AI lab Mistral said it would lease $1.4 billion worth of infrastructure at Borlänge; data center operator atNorth announced plans for an enormous facility elsewhere in Sweden; and another developer outlined a project that would more than double Finland’s current data center capacity if completed.
The building frenzy is being spurred in part by an acute shortage of sites in Europe that are large enough and equipped with sufficient energy supply to support AI workloads.
“There’s an extraordinary amount of demand out there, but servicing that demand is increasingly an issue across Europe,” says Kevin Restivo, director of data center research at CBRE. “Power is an increasingly precious commodity, and there’s a scarcity of it.” Against that backdrop, he says, “Norway specifically has absolutely exploded as a data center hotbed.”
Previously, data centers in Europe tended to cluster around metropolitan and financial centers—particularly Frankfurt, London, Amsterdam, Paris, and Dublin. To support uses like algorithmic trading, where nanoseconds count, cloud companies needed a way to transport data with as little latency (or delay) as possible. Against those criteria, the Nordic countries were less attractive.
The picture began to shift in summer of 2023, six months after the breakout success of ChatGPT. Nordic government agencies began to field calls from eager data center developers. “There was a clear change,” says Jouni Salonen, a data center specialist at Business Finland, a Finnish government agency tasked with attracting trade and investment to the country. “Now, power—and quick access to power—is clearly the main criteria. They are looking for sites where they can get access to the market quickly.”
The growth in the Nordic data center industry has coincided with the emergence of neoclouds, a type of specialist cloud company that sells access to huge fleets of GPUs. Because they serve only AI workloads, which are not as latency-dependent, neoclouds are free to establish data centers in far-flung corners of the region—even as far north as the Arctic Circle. Neoclouds account for the majority of the data center capacity growth in Nordics, CBRE found.
To this new type of developer, the Nordic countries represent a unique proposition. There is both plenty of available land and energy, and power in the region is among the cheapest in Europe. Meanwhile, the glut of renewable hydropower and wind energy, and the cool climate—which reduces the amount of energy required to cool hardware—helps data center operators meet stringent EU emissions targets.
“You’re not really trading away much by locating there, but you’re gaining an enormous amount: abundant green contiguous power with little competing industrial demand for that power,” says Philippe Sachs, chief business officer at neocloud firm Nscale, which operates the Norway site where OpenAI and Microsoft lease space. “When you’re thinking about trying to build very, very large, giga-factory-style compute clusters, it’s far and away the best place to do it in Europe, if not the world.”
The demand among data center operators is propelling a surge in land prices even in remote areas of the Nordics, where heritage industries like mining, lumber, and paper have dried up. “It differs from case to case, but the value of forest land soon to be zoned for data center use is currently 4 to 9 times higher than normal forest land in the region,” says Salonen. The hope is that the arrival of AI data centers might revive those fading rural economies. “The municipalities are very anxious for investment,” says Salonen.
The vision of a flawless symbiosis—whereby the Nordics provide an ideal home to a breed of power-hungry but not latency-dependent AI data centers, which in turn reinvigorate rural economies—hinges on the proposed facilities actually coming to fruition.
Some hyperscale data center operators, Restivo asserts, are hoarding suitable sites in anticipation of future need, without an immediate intention to develop there. “They don’t need all the power they have contracted today, but they think they’ll need it,” he claims. “And they certainly want to keep it away from competitors.”
For now, though, as the available space in Western Europe continues to dwindle, plans for new data centers in the Nordics continue to be announced almost weekly. Elsewhere, the scarcity of energy is “far and away the biggest constraining factor,” says Andrew Jay, head of data center solutions EMEA at CBRE. “It’s driving pretty much everything.”
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