Experts question Finland as Europe’s Texas after Google investment

Finland has been compared with Texas because both are attracting large numbers of data centres, but the similarities between the regions are limited, Yle reports. The comparison resurfaced after Google announced a 13 billion euro investment in Finland over the next two years.

The investment will support artificial intelligence infrastructure, technology development and Google’s Finnish operations. It is the largest investment in Finland’s history and the company’s largest investment anywhere in Europe.

The announcement also brought attention to the description of Finland as “Europe’s Texas”, used by Matti Lajunen, a partner and lawyer at law firm Hannes Snellman, in an interview with CNBC.

The comparison refers to the large share of US data centre projects being built in Texas because of the state’s available land and energy resources. The same factors are seen as advantages in Finland.

Different scales

Finland and Texas both view data centres as part of their wider energy systems, said Stefan Lindström, head of Finland’s Consulate General in Houston. However, the scale is very different.

Texas is dealing with a few hundred gigawatts of capacity, while Finland has only a few, Lindström said. The United States already has more than 4,000 data centres, with about 1,500 more under construction. Texas has more than 500 data centres.

Finland remains attractive because it has large amounts of available land and a particularly strong reputation. Its permitting procedures are considered reliable and predictable.

Northern Europe also attracts data centre operators because of its cool climate, which reduces the need for water and electricity for cooling. Lajunen said many operators consider Fingrid, Finland’s transmission system operator, one of the best electricity grid companies in the world. The reliability of the main grid and the predictability of its processes are also attractive, he said.

Texas has taken a less regulated approach

The United States does not have one unified electricity grid covering the entire country. Its grid is divided into smaller systems.

Texas, the country’s second-largest state, has built an electricity grid independent of the others. It covers about 90 per cent of the state’s electricity needs, helping Texas avoid the reach of the Federal Energy Regulatory Commission.

Companies are building data centres in Texas partly because the state has taken a “Wild West” approach to regulation, said Vili Lehdonvirta, a professor at Aalto University.

The downside is that the electricity grid has not kept pace with demand. A few years ago, consumers lost power during a period of winter freezing temperatures.

Fossil fuels are also viewed differently in Texas, a state known for its oil wealth, than in Finland. Backup power for data centres is largely being built around gas turbines, Lehdonvirta said.

Texas has additionally attracted data centres through tax incentives. According to The Texas Tribune, the state loses more than one billion dollars in tax revenue each year because of tax breaks for data centres.

Data centre projects began pouring into Texas last year. The state’s electricity grid operator, ERCOT, received expressions of interest from 519 large customers seeking connections, compared with 24 the previous year. The Texas Tribune reported that data centre projects accounted for 90 per cent of the requests.

Google has said it plans to invest 40 billion dollars in Texas next year in projects similar to those it is now planning in Finland.

Criticism on both sides of the Atlantic

Data centre announcements have not been greeted with fanfare everywhere in the United States. A survey conducted in the spring found that more than two-thirds of Americans oppose data centre construction in their local area.

Texans are concerned about rising electricity prices, noise, water availability and the resilience of the electricity grid. The issue is showing signs of becoming a major point of dispute in the state’s congressional elections in November.

Political dissatisfaction is leading to action, and Lindström said Texas is preparing to increase regulation of data centres.

Lajunen said discussion of data centres in Finland can also become polarised, with complex projects reduced to individual data points. He said the issue should be viewed more broadly.

Finland currently has a large number of renewable energy projects on hold, waiting for the right time to proceed. Lajunen said it was unfortunate that the positive chain reaction such projects could create for society was not given more attention.