Google chose four Finnish locations for 13 billion euro data centre investment

Google’s decision to invest 13 billion euros in data centres in Kajaani, Vaala, Muhos and Hamina followed years of work, Yle reports. The technology company was drawn by Finland’s cool climate, stable society, renewable energy and available electricity.

The investment is expected to create about 1,200 direct jobs. Google estimates that its total impact across the four locations will amount to 37,000 jobs, including both permanent and construction work.

Risto Hämäläinen, development director for the city of Kajaani, said the reputation of the Lumi supercomputer and the data centre network that has grown around it had made the region attractive.

Jukka Vainonen, Google’s regional director for data centre operations in the Nordic countries, said the availability of land, electricity and grid capacity had been decisive. Kajaani, Vaala and Muhos had welcomed Google from the beginning.

Kajaani was first contacted in autumn 2023. The people who made contact did not reveal their identities, but asked detailed questions about the city’s services and access to skilled workers.

“We provided the requested information about the city’s services and the availability of skilled labour,” Hämäläinen said.

The city’s main role has been in land-use planning. It has prepared master plans and detailed plans, although the process is still continuing.

Growing demand for artificial intelligence shifted the search north

Business Finland had been in contact with Google since 2006 or 2007, when the company chose Hamina. A new expansion search began in spring 2023, but its direction changed decisively in August.

“The requirements of artificial intelligence, growing electricity demand and the possibility of expanding operations became more important. Locations in southern Finland were no longer considered, and the search moved north, where energy production is dominated by wind power,” said Jouni Salonen, a data centre expert at Business Finland.

Google representatives visited several Finnish municipalities anonymously in October and November 2023. There were between five and ten potential competing locations, but the selection was quickly narrowed to three municipalities.

“The Google representatives did not tell the municipal hosts who they were, but I tried to convince residents that there was a genuine and credible organisation behind the process,” Salonen said.

Finland offered room to expand

Several factors influenced Google’s choice of Finland. The country’s electricity grid is among the most stable in Europe, and 94 per cent of its electricity is carbon neutral. Finland is also sparsely populated, leaving space for data centre operations.

“We have space, a cold climate, cooling water, clean air and a stable society,” said Jari Haapaniemi, deputy chair of the Kainuu Entrepreneurs association.

Finland’s NATO membership also played a role, according to Salonen.

“Being in NATO brings security and stability,” he said.

Salonen said Finland was also relatively underused for data centres compared with many other European countries, giving Google more locations to choose from.

Investment value includes equipment made abroad

The total value of the investment is 13 billion euros, but that figure also includes IT equipment and processors that are not manufactured in Finland. About three billion euros is estimated to go towards infrastructure, buildings and electricity lines.

“Billions will factually remain in Finland. A billion is a large amount of money and should not be underestimated. We need to focus on what we have and try to secure as large a share of the construction work as possible,” Salonen said.

Salonen added that the indirect and induced economic effects would be even greater. He said the municipalities’ annual property tax revenue from the data centres would amount to more than one million euros.

Entrepreneurs in Kainuu have responded to the investment with cautious optimism. Haapaniemi expects gradual but reliable change.

“This will happen in small steps. When we look back in five years, we will see that many good things have happened,” he said.

Activity has already increased in the region, with lunch restaurants full and construction sites providing work.