Smart specialisation: how a harsh climate inspired a tech boom

A remote coastal city in northern Sweden, just 100 kilometres south of the Arctic Circle, has become the unlikely location for tens of thousands of blinking, humming computers. 

Since 2011, Luleå has been home to a large slice of the physical internet – Facebook’s only data centre outside the US. It is the largest hub for internet traffic in Europe and claims to have the greenest credentials in the world. 

This is a massive coup for the city of just under 50,000 people. But how did a place with little history of technology success grab the attention of one of the industry’s multi-billion corporations? 

“The feeling was it could never happen – but it did,” said Matz Engman, the CEO of Naringsliv, an umbrella group that links the city’s businesses and the local municipality.

A combination of factors clicked neatly into place. 

Facebook, the social media giant, was beginning to handle the profiles, photos and messages of one in seven people in the world daily, and its need for computer processing and storage was growing fast. 

Data processing and storage as a whole was predicted to overtake the aviation industry by 2020 as a generator of greenhouse gas emissions, an unsettling trend for environmentalists concerned with data farms’ voracious electricity-guzzling habits and the implications for climate change.

Engman was prompted to look around him and ask, “What can we offer?” 

Seeing potential in his region’s sub-arctic location, he began drawing up a compelling pitch. “It turned out we had everything Facebook needed: a cold climate to keep cooling costs down, cheap, 100 per cent renewable energy, a stable electricity grid and solid infrastructure,” Engman told Science|Business. 

The data farms could be powered by hydroelectricity from the Luleå River and the natural air-conditioning of Sweden’s cold climate would save servers from burning out, he thought. There is also a university nearby, a fast fibre-optic network and an airport with 16 daily flights to Stockholm. 

A new brand – the ‘Node Pole’ – was born and Engman began a trans-Atlantic charm offensive in 2009. “We met 14 companies and we couldn’t dream one of them, Facebook, would be interested,” he said. 

Negotiations with the internet giant were tough and lengthy. The time difference between California and Sweden meant Engman and his team had to work past 5pm every day. Facebook looked at 40 possible sites between March 2010 and March 2011 before finally choosing Luleå.  

Micro-boom

Since Facebook arrived in 2011, data centres for KNC Miner, which will house the computing equipment for generating and tracking the virtual currency Bitcoin, and for the British hydroelectricity company Hydro 66, have been set up in the region around Luleå. 

Hydro 66 executives say they save just under €150,000 a year by hosting their data centre in Sweden instead of in London. 

Now two more server labyrinths are in development by Facebook, proof that the Node Pole has been a success, said Engman.

Other Scandinavian regions, similarly blessed with low energy prices, are racing to cash in on the data centre mini-boom – a niche policymakers in Brussels might refer to as a ‘smart specialisation’. 

In 2011, Google opened a data centre in an old paper mill in Hamina, Finland, where the company rebuilt a seawater cooling system. Green Mountain Data, a data farm, is located inside a Norwegian mountain cooled by a fjord, and Apple has recently announced it will build a new data facility in Jutland, Denmark. 

A positive spiral

The knock-on effect of hosting Facebook has been huge for Luleå, said Engman. Admissions to the Luleå University of Technology have shot up, there are 1,500 construction jobs, new roads, hotels and restaurants. 

“If you want to eat out you have to book a table in advance. That’s never happened before in Luleå,” Engman noted.