Government drops data centre tax support as Polarnode protests

Finland’s government has abandoned a planned 30 million euro tax benefit for data centres, a decision criticised by Polarnode, which is developing a data centre in Lappeenranta, Yle reports. A professor at LUT University supports the move.

Electricity used by data centres moved from the lower tax category to the general category at the start of July and will remain there.

Polarnode board chair Mikko Toivanen called the decision bad news. The company is responsible for the data centre project in Pajarila, Lappeenranta, which is expected to become one of Europe’s largest data centres focused on artificial intelligence computing. Data centre company Nebius will use the facility.

“Data centres now pay more electricity tax than other energy-intensive industries,” Toivanen said.

Jukka Ruusunen, an industrial professor at LUT University, said cancelling the tax benefit was a positive decision. He said continued support for data centres would have been an inappropriate use of public tax funds.

Ruusunen said data centres had already received sufficient support because Finland offers them affordable and clean electricity. In his view, tax revenue should instead be used to invest in a stronger electricity system. He said the situation is now the same as in Sweden.

More data centres are being planned in Finland, while electricity consumption and the importance of electricity are expected to grow significantly in Finland and across Europe. Data centres are one factor behind the need for increased electricity production.

Data centres consume large amounts of electricity, raising concerns among residents about their possible impact on electricity prices. Toivanen said the situation was not serious, although he acknowledged that increased demand could potentially lead to fluctuations in prices. He said Finland has the lowest electricity prices in Europe.

Ruusunen believes electricity supply will grow alongside demand. However, he noted that Finnish winters can be difficult, with cold and windless periods potentially driving prices higher. He called for faster action and public measures and support for electricity production during such periods, noting that power plants take a long time to build.

Construction of the Pajarila data centre is progressing rapidly. Toivanen said Lappeenranta’s electricity network operator could make a connection to the electricity grid by the turn of the year. The first building is estimated to be completed at the beginning of 2027.

Local residents have heard construction noise at night. Toivanen confirmed that workers have sometimes worked overnight to complete parts of the project, although he said this was not normal.