Cloudland: Why Iceland’s a Natural for the Cloud

(Image: Wikimedia Commons)
(Image: Wikimedia Commons)

By Daniel Wilcock

In 2008, the banking system of Iceland systematically failed, which led to a financial crisis from which the Nordic European island country is still recovering.

What does this have to do with cloud computing?

Iceland got rich temporarily through high finance, but it was boom and bust.  In the aftermath of this painful episode, this island comprised mostly of a “cold and uninhabitable combination of sand, mountains and lava fields,” must find a sustainable economic growth alternative.

Cloud computing can be that alternative. Consider:

  • Data centers require a lot of energy, but Iceland has a steady supply of thermal energy—enough to power the centers entirely through natural energy.
  • Data centers use less energy when the ambient temperature is lower and Iceland’s name says it all. The year-round climate is chilly. Combined with the steady energy supply, those cooler temperatures ensure further energy efficiency.
  • For security and risk mitigation reasons, data centers are best situated in sparsely populated areas. Iceland is one of the world most sparsely populated countries.

A Rapidly Expanding Market

According to the technology research company Gartner, the market size of public cloud services in 2013 is $131 billion and its 2013 growth rate will be 18%. The same study found infrastructure as a service as (IaaS) the fastest-growing component of the cloud market.  IaaS grew 42.4 percent in 2012 to $6.1 billion. This year the increase is predicted to be 47.3 percent.

Cloud computing, particularly IaaS, represents a good opportunity for return on capital invested by any entity. Yet Iceland has significant advantages that would make its return on investment greater than competitors in other counties. Those advantages are natural geothermal energy and an environment conducive to both greater efficacy and better security, factors described below.

Cloud computing is also a better alternative than the recent explosion of aluminum smelter operations in Iceland—an industry that already consumes five-times the amount of electricity as Iceland’s residents. As the financial crisis taught, over-reliance on one industry creates significant risk. Cloud computing can be a balancing factor that will reduce this risk.

Solving Cloud Computing’s Energy Crisis

Not only would Iceland’s economy benefit from a major investment in cloud computing, the cloud computing market would benefit greatly. This is because the data centers that make cloud computing possible use vast quantities of electricity. By one estimate, a typical server farm uses the same amount of power as 180,000 homes. Iceland’s historic investment in capturing geothermal energy has paid tremendous dividends. Currently 25% of electricity usage in Iceland is from geothermal, with almost all of the balance coming from hydro-power.  This gives data center operations in Iceland four distinct energy advantages:

  • Abundant, cheap power
  • Green power
  • Power derived from a source unlikely to fail suddenly
  • Cooler ambient temperatures that reduce the need to use power to cool servers, making data centers more efficient

If the data revolution continues to grow exponentially within a context of worsening global environmental problems such as climate change, companies around the world will be under pressure to find eco-friendly solutions for cloud computing. Some companies are already showing the way in Iceland. An Icelandic startup called Greenqloud offers a “sustainable public compute cloud that is 100% carbon neutral.” They have been joined by Verne Global, a British company that offers similar 100% renewable-energy services.

Yet one big potential disadvantage to making Iceland “cloudland” must be mentioned: Iceland’s abundant geothermal power comes from the island’s volcanic character. A major eruption could wipe out one or more centers. This risk can be mitigated by locating all data centers in areas far from the ridges on which Iceland’s volcanos rise and seeking protective land formations that would shield from lava flows such as natural or man-made caves.

In the past Iceland has been the victim of its unforgiving geography, which is not conducive to farming or dense population. The era of big data could flip this reality, making Iceland’s low temperatures and abundant natural energy the nation’s signature assets.

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